Has Ecolab’s Strong Multi Year Rally Already Priced In Its Growth Story?

• Wondering if Ecolab at around $261 a share is still a smart buy, or if the easy money has already been made? Let us unpack what the market might be pricing in and where the value really sits.
• The stock is up 1.7% over the last week, 2.5% over the past month, and 13.4% year to date, with a strong 87.4% gain over three years and 29.7% over five, which suggests investors have been steadily bidding up its quality story.
• Recently, investors have been paying closer attention to Ecolab as demand for hygiene, water treatment and sustainable cleaning solutions remains front and center globally. Ongoing momentum in these structural themes has helped support sentiment, even as markets weigh broader macro and interest rate risks.
• Despite that strength, Ecolab currently scores just 0/6 on our valuation checks. This hints that the stock might be fully priced on traditional metrics, at least on the surface. Next, we will break down what different valuation approaches say about Ecolab, and then circle back to a more holistic way to think about its true worth.

Ecolab scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Ecolab Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting the cash it could generate in the future and then discounting those cash flows back to their present value.

For Ecolab, the model uses a 2 Stage Free Cash Flow to Equity approach. The company generated about $1.71 billion in free cash flow over the last twelve months, and analysts expect this to rise to roughly $2.66 billion by 2028. Beyond the explicit analyst horizon, Simply Wall St extrapolates cash flows further out, with ten-year projections gradually climbing toward roughly $3.6 billion a year, all still expressed in $.

When those projected cash flows are discounted back, the implied intrinsic value lands at about $218.49 per share. With the stock trading around $261, the DCF suggests it is roughly 19.9% overvalued, meaning the current price already reflects optimistic growth assumptions.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Ecolab may be overvalued by 19.9%. Discover 908 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Ecolab.

Approach 2: Ecolab Price vs Earnings

For a profitable business like Ecolab, the price to earnings ratio is a useful way to gauge how much investors are willing to pay today for each dollar of current earnings. In general, faster growing, more resilient companies deserve a higher PE, while firms with weaker growth or greater risk tend to trade on lower multiples.

Ecolab currently trades on about 37.4x earnings, well above the US Chemicals industry average of roughly 24.0x and the broader peer group at about 23.3x. On the surface, that gap suggests the market is assigning Ecolab a clear quality and growth premium.

Simply Wall St also calculates a proprietary Fair Ratio of 25.3x. This estimates the PE Ecolab should trade on after accounting for its earnings growth outlook, profitability, risk profile, industry characteristics and market cap. This is more nuanced than a simple comparison to peers or the industry, which can overlook differences in margins, leverage or growth durability. With the actual PE of 37.4x sitting materially above the 25.3x Fair Ratio, the multiple analysis points to Ecolab being priced on the expensive side.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Ecolab Narrative

Earlier we mentioned that there is an even better way to understand valuation, and on Simply Wall St that better way is Narratives, a simple tool on the Community page that lets you connect your story about a company with a set of forecasts and a Fair Value, then compare that to today’s price to decide whether to buy, hold or sell.

A Narrative is your perspective written into numbers, where your view on Ecolab’s growth drivers, risks and margins is translated into assumptions for future revenue, earnings and profit margins. The platform then turns these into a fair value estimate that updates dynamically as new earnings, news and price targets arrive.

For example, one Ecolab Narrative might lean bullish and assume the business fully delivers on margin expansion, digital growth and dividend upgrades, supporting a fair value closer to the higher analyst target of about $325. A more cautious Narrative might emphasize softer industrial demand, tariff risks and execution challenges, landing nearer the low end of analyst targets around $243. Both investors can then instantly see how their Fair Values stack up against the current price around $270.66.

Do you think there's more to the story for Ecolab? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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