ECL, Ecolab Inc.
We pursue a "One Ecolab" enterprise selling strategy, built on the legacy of 'circle the customer circle the globe', where we provide an array of innovative programs, products and services designed to meet the operational and sustainability needs of our customers throughout the world.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, drawn from its own SEC filings. The lens to bring to the numbers below, not the answer.
- What it is
- Revenue is Product and equipment sales (78%) and Service and lease sales (22%).
- What moves the needle
- Pricing power, the surest mark of a moat. What decides it: whether it can raise prices with inflation and not lose the customer, whether the brand still earns its place on the shelf, and whether volume holds when a cheaper rival appears. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
- Is it a good business?
- Return on capital has sat near the cost of capital (median 10%). Owner earnings agree: roughly 11% of revenue reaches owners as cash, consistently. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the 10-K is where you look.
No model wrote a word of this. Every line is arithmetic on the company's filings, shown in full in the sections below; the judgment is yours.
Where the money comes from
read the 10-K →Revenue spreads across 4 segments, the largest Global Water at 50%.
- Global Water50%$8.0B
- Global Institutional and Specialty38%$6.1B
- Global Pest Elimination8%$1.2B
- Global Life Sciences5%$748M
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $13.2B | $13.8B | $12.2B | $12.6B | $11.8B | $12.7B | $14.2B | $15.3B | $15.7B | $16.1B | $16.5B |
| Gross marginGross mgn | 43% | 42% | 44% | 44% | 41% | 40% | 38% | 40% | 43% | 44% | 44% |
| Operating marginOp. mgn | 14.2% | 14.1% | 14.1% | 14.7% | 11.8% | 12.6% | 11.0% | 13.0% | 17.8% | 17.0% | 17.0% |
| Net incomeNet inc. | $1.2B | $1.5B | $1.4B | $1.6B | ($1.2B) | $1.1B | $1.1B | $1.4B | $2.1B | $2.1B | $2.1B |
| EPS (diluted)EPS | $4.14 | $5.12 | $4.88 | $5.33 | $-4.15 | $3.91 | $3.81 | $4.79 | $7.37 | $7.28 | $7.42 |
| Owner earningsOwner earn. | $1.2B | $1.2B | $1.5B | $1.7B | $1.4B | $1.4B | $1.1B | $1.6B | $1.8B | $1.9B | $1.9B |
| ROICROIC | 11% | 11% | 10% | 10% | 10% | 8% | 8% | 10% | 15% | 13% | 13% |
| Cash & investmentsCash+inv | $327M | $211M | $115M | $119M | $1.3B | $360M | $599M | $920M | $1.3B | $646M | $520M |
| Net debt / (cash)Net debt | $6.3B | $7.1B | $6.6B | $6.2B | $5.4B | $8.0B | $8.0B | $7.3B | $6.3B | $7.5B | $7.7B |
| Dividends / shareDiv/sh | $1.44 | $1.53 | $1.69 | $1.89 | $1.93 | $1.96 | $2.10 | $2.15 | $2.32 | $2.64 | — |
| Book value / shareBVPS | $23.26 | $25.79 | $27.33 | $29.69 | $21.24 | $24.99 | $25.25 | $28.08 | $30.56 | $34.26 | $35.26 |
Owner’s Scorecard
Will it survive?
- ComfortableOperating income $2.7B ÷ interest expense $306M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ModerateTotal debt $8.1B ÷ operating income $2.7B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $7.5BMeaningful net debtCash $646M − debt $8.1B
Netting $646M of cash and short-term investments against $8.1B of debt leaves $7.5B owed, about 2.7× a year's operating profit, versus the gross figure above. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- TightDSO 74 + DIO 61 − DPO 85 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- SolidNOPAT $2.2B ÷ invested capital $17.2B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $1.9B = operating cash $3.0B − capex $1.0B
What an owner could take out without starving the business. That's 12% of revenue. Treating stock comp as the real expense it is (less $137M of SBC) leaves $1.8B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $3.0B ÷ net income $2.1B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns about halfDividends + buybacks $1.5B ÷ Owner Earnings $1.9B
Of $1.9B Owner Earnings, $1.5B (81%) went back to shareholders, $754M dividends, $784M buybacks. Net of $137M stock comp, the real buyback was about $647M. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 1.47×ExpandingCapex $1.0B ÷ depreciation $715M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 9 of 10
Lost money in 1 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 1 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 14% (FY2016) → 17% (FY2025)
Margins widened over the record, pricing power intact or improving.
- Reinvestment, incremental ROIC 32%
Every extra dollar the company reinvested earned a high return, it is still compounding, not coasting on an old moat.
- Owner earnings growth +5%/yr
Free cash to owners grew about 5% a year over the record.
- Worst year 2022 · 11.0% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count −0.4%/yr
Roughly flat share count, little dilution, little buyback.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $22.6B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$7.8B · 34%
- Dividends$5.7B · 25%
- Buybacks$4.8B · 21%
- Retained (debt / cash)$4.3B · 19%
It reinvested $7.8B (34%) back into the business and returned $10.5B (46%) to owners, $5.7B in dividends, $4.8B in buybacks. Total debt rose $1.5B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$137M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 5% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
3 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $16.1B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 1.08×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $8.1B vs $421M WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability NearA profit every year (10-yr record) · 1 loss year
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +34%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $7.28/share and book value $34.26/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Ecolab Inc. has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $1.9B on 284M diluted shares; net debt $7.7B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Customer concentrationRisk Factors
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“We conduct business in more than 170 countries and, in 2025, approximately 47% of our net sales were generated from customers outside the United States.”
From the recordRevenue exposed (TTM)$16.5B - Concentrated dependenceBusiness
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Customers and Classes of Products We believe our business is not materially dependent upon a single customer.”
From the recordOwner-earnings margin at stake (TTM)11% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“As of December 31, 2025, we were in compliance with our debt covenants and other requirements of our credit agreements and indentures.”
From the recordBalance sheet (TTM)$7.5B meaningful net debt · interest covered 8.9× - Litigation & contingenciesBusiness
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“We have also been named as a defendant in a number of lawsuits alleging personal injury due to exposure to hazardous substances, including multi-party lawsuits alleging personal injury in connection with our products and services.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“The COVID-19 pandemic had a rapid and significant negative impact on the global economy, including a significant downturn in the foodservice, hospitality and travel industries.”
From the recordWorst year on record11.0% operating margin (FY2022) - Regulation & policyBusiness
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Future EPA risk evaluation decisions may result in the reduction or elimination of future uses for some products.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “Discrete items include tax benefits of $62.1 million associated with a change to the tax classification of a wholly-owned non-US subsidiary that resulted in recognizing a capital loss and benefit of $30.4 million due to additional basis of foreign intangible assets.”
- “The unrecognized net losses on our U.S. qualified and non-qualified pension plans decreased to $486 million as of December 31, 2025, from $526 million as of December 31, 2024 (both before tax), primarily due to higher actual return on assets.”
- “Estimates are considered to be critical if they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.”
- “Adjusted for the Ovivo Electronics acquisition, the decrease in net interest expense when comparing 2025 against 2024 reflects the impact from lower interest rates and a higher cash balance.”
- “We maintain workers' compensation and other insurances to address the risk of incurring material liabilities for injuries or deaths, but there can be no assurance that the insurance coverage will be adequate or will continue to be available on terms acceptable to us, or at all, which could result in…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Household & personal care
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| PGProcter & Gamble Co. | $84.3B | 51% | 24.3% | 21% | 17% |
| CLColgate-Palmolive Co. | $20.4B | 60% | 16.2% | 36% | 18% |
| ECLEcolab Inc. | $16.1B | 44% | 17.0% | 13% | 12% |
| KVUEKenvue Inc. | $15.1B | 58% | 16.0% | 10% | 11% |
| ELEstee Lauder Companies Inc | $14.3B | 74% | -5.5% | -7% | 5% |
| CLXClorox Co. | $7.1B | 45% | 16.2% | 33% | 11% |
| CHDChurch & Dwight Co., Inc. | $6.2B | 45% | 17.4% | 14% | 18% |