Ecolab, Inc. ECL is scheduled to report first-quarter 2025 results on April 29, before the opening bell.
In the last reported quarter, the company’s earnings per share (EPS) of $1.81 surpassed the Zacks Consensus Estimate by 1.1%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, delivering an earnings surprise of 0.9%, on average. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)
Let’s see how things have shaped up for Ecolab prior to this announcement.
Ecolab’s Global Industrial
The Global Industrial segment, comprising the Water, Food & Beverage, and Paper units, witnessed a sales uptick in the fourth quarter of 2024. Per the company’s fourth-quarter earnings call in February, the Water business has been performing well for the past few months and has been growing at an encouraging rate at a very high margin. Management expects its growth to influence the overall industrial profile in the midterm as it grows in importance versus the size of the overall business. During the fourth quarter, Water’s improved growth was led by continued strong growth in downstream and light water. This looks very promising for the segment.
During the fourth quarter, management noted that the Industrial segment had shown a good acceleration through the year. Per management, this is notable given the segment’s international exposure, as strong new business and value pricing have overcome softer end-market trends. Improved Food & Beverage sales reflected good new business wins, which benefited from the company’s One Ecolab enterprise selling approach. These trends are expected to have continued in the first quarter of 2025, thereby boosting the segmental contribution.
The Zacks Consensus Estimate for the first-quarter Global Industrial segment revenues is currently pegged at $1.92 billion, suggesting an uptick of 4.1% from the year-ago quarter’s reported figure.
ECL’s Global Institutional & Specialty
Ecolab’s Global Institutional & Specialty segment recorded strong growth in the last reported quarter, courtesy of the company’s performance in the Institutional and Specialty divisions. Per management, the segment recorded growth from new business and customer penetration gains, while value pricing continued to build. The segment is likely to have continued to benefit from customer penetration, thereby driving revenues in the first quarter.
The Zacks Consensus Estimate for the first-quarter Global Institutional & Specialty segment revenues is currently pegged at $1.37 billion, suggesting an uptick of 7.9% from the year-ago quarter’s reported figure.
Other Factors Aiding Ecolab
In fourth-quarter 2024, Ecolab’s Life Sciences unit of the broader Global Healthcare & Life Sciences segment witnessed good new business wins and progressively improving industry trends. Within the Global Pest Elimination segment, ECL continued to focus on accelerating the rollout of its digital pest intelligence program. These look promising for the stock as these trends are likely to have continued in first-quarter 2025, thereby driving up revenues.
However, the continued non-strategic low-margin business exits within the Global Healthcare & Life Sciences segment, as Ecolab continued to execute Healthcare’s business transformation, are likely to have weighed on its first-quarter performance. Also, the currently volatile macroeconomic environment stemming from tariff uncertainties also raises our apprehension about the stock’s performance in the to-be-reported quarter.
Ecolab Inc. Price and EPS Surprise
Ecolab Inc. Price and EPS Surprise
Ecolab Inc. price-eps-surprise | Ecolab Inc. Quote
ECL’s Estimate Picture
For first-quarter 2025, the Zacks Consensus Estimate of $3.70 billion for total revenues implies a decline of 1.4% from the prior-year quarter’s reported figure.
The consensus estimate for EPS is pegged at $1.51, implying an improvement of 12.7% from the prior-year period’s reported number.
What Our Model Suggests About Ecolab
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold), along with a positive Earnings ESP, has higher chances of beating estimates. This is not the case here, as you can see below.
Earnings ESP: ECL has an Earnings ESP of -0.40%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
ECL’s Share Price Performance
Over the past three months, Ecolab’s shares have lost 3.6%, outperforming the Chemical - Specialty’s 6.6% decline. ECL’s shares underperformed the Zacks Basic Materials sector’s decrease of 2.9% but outperformed the S&P 500’s decline of 10.9%.
Three Months Price Comparison
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Ecolab’s peers like Hawkins, Inc. HWKN and Givaudan SA GVDNY have outperformed the company, while Balchem Corporation BCPC underperformed the company. HWKN and GVDNY’s shares are up 8.2% and 1.1%, respectively, while BCPC shares are down 5.4% in the same time frame.
Ecolab’s Key Valuation Metric
From a valuation standpoint, ECL’s forward 12-month price-to-earnings (P/E) is 30.4X, a premium to the industry's average of 22.1X.
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The company is trading at a significant premium to its peer, Hawkins. However, Ecolab is trading at a discount to its other peers like Balchem and Givaudan. Hawkins’ P/E currently stands at 27.6X, while the ratios for Balchem and Givaudan stand at 30.5X and 31.1X, respectively.
This suggests that investors may be paying a higher price relative to the company's expected sales growth.
ECL’s Long-Term Investment Visibility
Ecolab has made impressive progress within its Global Water business, including its efforts to grow its business through the acquisition of Barclay Water Management, helping enhance its water safety and digital monitoring solutions. It has also collaborated with Digital Realty to deploy an AI-driven water conservation solution in 35 of Digital Realty’s U.S. data centers, aiming to improve water use efficiency and reduce environmental impact. Ecolab's water and process management business, Nalco Water, has partnered with Danieli to enhance industrial water treatment for the metals industry, aiming to improve production processes, reduce carbon and water footprints and lower costs. These developments are expected to significantly boost Ecolab’s business in the long run.
Per management, Ecolab’s Global Institutional & Specialty and Global Pest Elimination segments’ performances continue to converge within the respective segment’s long-term organic growth objective as inflationary impacts have normalized. The Global Institutional & Specialty segment’s Institutional and Specialty businesses have been continuing to significantly outperform end-market trends as well. This raises our optimism about their long-term profitability prospects.
Our Final Take
There is no denying that ECL sits favorably in terms of core business strength, earnings prowess, robust financial footing and global opportunities. The stock’s strong core growth prospects are a good reason for existing investors to retain shares for potential future gains.
However, for those exploring to make new additions to their portfolios, the valuation indicates expectations of muted performance compared with its industry and sector peers. As it is still valued higher than the broader market, it does not suggest any potential room for growth until it can align more closely with overall market performance. As the chances of beating estimates are unlikely, it would be unwise to add the stock to one’s portfolio before the earnings. However, if investors are already holding the stock, it would be prudent to hold on to it at present. The favorable Zacks Style Score with a Growth Score of B suggests continued uptrend potential for Ecolab.
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