Value
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.2 |
| P/S | 7.0 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.1 |
| PEG | 3.9 |
| Analyst target | 5.0 |
- ▸Forward P/E: 29.6x
- ▸PEG: 2.63
ECL · Why this verdict
Why Ecolab (ECL) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward earnings multiple of 28 times and a PEG ratio of 2.49, the stock is priced at a significant premium that incorporates a high growth expectation, limiting the potential for further multiple expansion and leaving the stock vulnerable if growth disappoints. Valuation breakdown | Forward earnings multiple compresses below 22 times as earnings growth accelerates, bringing the PEG ratio below 1.5 and reflecting a more reasonable premium for the quality franchise. | →Stable |
| CounterA premium multiple can persist for extended periods for a high-quality business with predictable cash flows, particularly if earnings growth surprises to the upside and reprices the valuation ceiling higher. | ||
The company ranks among the top of its peer group on both margins and return on equity, supported by a financial-strength score of 7 out of 9, reflecting a franchise that has consistently generated above-average returns across its peer universe. Peer-rank breakdown | The company maintains best-in-class margin and superior return-on-equity standings versus peers for the next 4 reported quarters, confirming the quality advantage is durable. | →Stable |
| CounterPeer-relative quality rankings can erode if lower-cost competitors grow faster or if input cost inflation compresses margins disproportionately relative to others in the sector. | ||
The stock is trading below its 200-day moving average after a death cross, a technical configuration that marks a period of sustained underperformance; while the MACD is improving and momentum is recovering, the setup has not yet confirmed a full reversal. Gates warning | The stock reclaims and holds above the 200-day moving average for at least 2 consecutive months, confirming that the technical headwind has resolved. | →Stable |
| CounterWith RSI at 62 and MACD turning positive, the death cross may be in the process of reversing; in a stock with improving internal momentum, a death cross can be a lagging rather than a leading signal. | ||
Over the last four quarters the company has posted two in-line results, one beat, and one slight miss, with an average surprise of essentially zero — executing near expectations without meaningful upside or downside relative to published estimates. Earnings | Two consecutive quarters of EPS beats with positive surprises each exceeding 3%, demonstrating a shift from flat-to-consensus delivery to a genuine beat trend. | →Stable |
| CounterExecuting closely to consensus with a near-zero average surprise is a sign of reliable forecasting, not of weak delivery; a franchise that consistently does what it says may command a more stable multiple than one that swings widely around estimates. | ||
Recent news flow carries a positive sentiment reading, which has been sufficient to shift the near-term posture from a sell-leaning stance to a hold, providing an incremental tailwind that may support the stock in the near term. Bull case | Positive news sentiment persists above a neutral reading for the next 3 months, sustaining the tailwind that underpins the current hold posture. | →Stable |
| CounterA single positive news event may be insufficient to drive a durable re-rating if the underlying earnings momentum and technical picture do not improve concurrently; the tailwind could reverse quickly if subsequent news flow turns neutral or negative. | ||
At a forward earnings multiple of 28 times and a PEG ratio of 2.49, the stock is priced at a significant premium that incorporates a high growth expectation, limiting the potential for further multiple expansion and leaving the stock vulnerable if growth disappoints.
→StableValuation breakdown
- Expectation
- Forward earnings multiple compresses below 22 times as earnings growth accelerates, bringing the PEG ratio below 1.5 and reflecting a more reasonable premium for the quality franchise.
CounterA premium multiple can persist for extended periods for a high-quality business with predictable cash flows, particularly if earnings growth surprises to the upside and reprices the valuation ceiling higher.
The company ranks among the top of its peer group on both margins and return on equity, supported by a financial-strength score of 7 out of 9, reflecting a franchise that has consistently generated above-average returns across its peer universe.
→StablePeer-rank breakdown
- Expectation
- The company maintains best-in-class margin and superior return-on-equity standings versus peers for the next 4 reported quarters, confirming the quality advantage is durable.
CounterPeer-relative quality rankings can erode if lower-cost competitors grow faster or if input cost inflation compresses margins disproportionately relative to others in the sector.
The stock is trading below its 200-day moving average after a death cross, a technical configuration that marks a period of sustained underperformance; while the MACD is improving and momentum is recovering, the setup has not yet confirmed a full reversal.
→StableGates warning
- Expectation
- The stock reclaims and holds above the 200-day moving average for at least 2 consecutive months, confirming that the technical headwind has resolved.
CounterWith RSI at 62 and MACD turning positive, the death cross may be in the process of reversing; in a stock with improving internal momentum, a death cross can be a lagging rather than a leading signal.
Over the last four quarters the company has posted two in-line results, one beat, and one slight miss, with an average surprise of essentially zero — executing near expectations without meaningful upside or downside relative to published estimates.
→StableEarnings
- Expectation
- Two consecutive quarters of EPS beats with positive surprises each exceeding 3%, demonstrating a shift from flat-to-consensus delivery to a genuine beat trend.
CounterExecuting closely to consensus with a near-zero average surprise is a sign of reliable forecasting, not of weak delivery; a franchise that consistently does what it says may command a more stable multiple than one that swings widely around estimates.
Recent news flow carries a positive sentiment reading, which has been sufficient to shift the near-term posture from a sell-leaning stance to a hold, providing an incremental tailwind that may support the stock in the near term.
→StableBull case
- Expectation
- Positive news sentiment persists above a neutral reading for the next 3 months, sustaining the tailwind that underpins the current hold posture.
CounterA single positive news event may be insufficient to drive a durable re-rating if the underlying earnings momentum and technical picture do not improve concurrently; the tailwind could reverse quickly if subsequent news flow turns neutral or negative.
TrendMatrix Research · core thesis
Engine thesis — one sentence
The specialty chemicals franchise posts best-in-class margins and superior peer-group returns supported by a positive news backdrop, but the stock sits below its long-term moving average, carries a premium multiple well above the market, and a favorable reward-to-risk direction does not yet clear the minimum asymmetry threshold — a setup that warrants patience rather than urgency.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.5 |
| ROA | 5.3 |
| Gross margin | 4.9 |
| Op margin | 6.8 |
| Net margin | 6.4 |
| Current ratio | 4.0 |
| FCF quality | 5.7 |
| Moat | 6.1 |
| Piotroski F | 7.8 |
- ▸Earnings quality warning: 75% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
4.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.0 |
| EPS growth | 3.6 |
Momentum
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.3 |
| MACD | 10.0 |
| OBV | 6.5 |
| MA position | 8.0 |
| Volume | 1.1 |
- ▸Overbought (RSI 74)
- ▸Above 200-MA but MA slope flat
Sentiment
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.8 |
| Analyst rating | 7.5 |
| Price target | 6.7 |
- ▸LLM news sentiment: +0.36 (n=5)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $155,399 (0.000% of mkt cap)
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.7 |
| quality rank | 8.6 |
| growth rank | 7.3 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.4 |
| support resistance | 0.2 |
| 52w position | 8.4 |
Risk (lower is worse)
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.3 |
| days to cover | 8.9 |
| volatility | 6.5 |
| put call | 6.2 |
| implied vol | 6.6 |
| beta | 7.6 |
| debt equity | 5.5 |
| news risk | 6.0 |
Catalyst
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 2.6 |
| dividend safety | 5.2 |
| news activity | 8.0 |
- ▸Dividend: 103.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.0>=5.5
- INSIDER:OK
- NEWS_BOOST:EARNINGS:0.60
- EARNINGS_PROXIMITY:24d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.1<1.5@spot
Warning (2)
- DEATH_CROSS:momentum=6.0>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.08
Upside
+0.8%
Downside
10.6%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 74
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.1<1.5@spot) reinforce the read. Current asymmetry R:R is 0.08 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.1, Sentiment at 7.0, and Quality at 6.1; the weakest are Technical at 3.3, Value at 4.0, and Growth at 4.3. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.08 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Best In Class Quality Versus Peers
Trip ifFinancial-strength score drops below 5 out of 9 from the current 7 out of 9 for 2 consecutive periods, signaling a deterioration in the quality foundation.
- P2Death Cross Technical Headwind
Trip ifStock reclaims and holds above the 200-day moving average for 2 consecutive months, confirming the death cross headwind has resolved.
- P3Premium Valuation Limits Upside
Trip ifForward earnings multiple compresses below 20 times as earnings growth accelerates, bringing the PEG ratio below 1.5.
- P4Near Consensus Earnings Delivery
Trip ifEPS beats consensus for 2 consecutive quarters, each with a positive surprise exceeding 3%, confirming a shift from flat delivery to genuine outperformance.
- P5Positive News Sentiment Support
Trip ifNews sentiment score turns negative (below 0) for 2 consecutive monthly readings, removing the near-term tailwind.