ECL Stock Falls in Pre-Market Despite Q3 Earnings Beat, Margins Expand

Ecolab Inc. ECL has reported third-quarter 2025 adjusted earnings per share (EPS) of $2.07, up 13.1% year over year. The bottom line surpassed the Zacks Consensus Estimate by a penny.

GAAP EPS for the quarter was $2.05, down 20.5% year over year.

ECL’s Revenue Details

Revenues grossed $4.17 billion in the reported quarter, up 4.2% year over year. The metric topped the Zacks Consensus Estimate by 1.1%.

Ecolab’s organic sales were $3.97 billion, up 3.2% from the prior-year period.

Shares of this company lost 1.3% in today’s pre-market trading.

Ecolab’s Segmental Analysis

The Global Water segment’s fixed currency sales of $1.95 billion marked 2.9% year-over-year growth. Organic sales were $1.93 billion, up 1.9% year over year. The segment’s performance reflected accelerating Food & Beverage sales growth, and continued growth in Light & Heavy, partially offset by lower Paper sales.

The Global Institutional & Specialty arm’s fixed currency sales were $1.54 billion, a year-over-year uptick of 1.3% on a reported basis. This reflected the impacts of the sale of the global surgical solutions business last year. Organic sales were $1.54 billion, up 3.8% year over year.

The Global Pest Elimination segment’s fixed currency sales of $322.6 million improved 6.9% year over year on a reported basis. Organic sales were $321.3 million, up 6.5% year over year. Strong organic sales growth was led by good gains in food & beverage, restaurants and healthcare, which continue to benefit from the company’s One Ecolab growth strategy.

The Global Life Sciences arm’s fixed currency sales and organic sales were $171 million each, reflecting year-over-year growth of 5.8% on both a reported and organic basis. Per management, year-over-year fixed currency sales and organic sales reflected continued double-digit growth in bioprocessing, while pharmaceutical & personal care overcame ongoing capacity constraints within Life Sciences’ industrial water purification business.

Ecolab Inc. Price, Consensus and EPS Surprise

 

Ecolab Inc. price-consensus-eps-surprise-chart | Ecolab Inc. Quote

ECL’s Margin Analysis

In the quarter under review, Ecolab’s gross profit improved 7.4% year over year to $1.87 billion. The gross margin expanded 135 basis points (bps) to 44.8%.

Selling, general and administrative expenses increased 5.3% year over year to $1.08 billion.

Adjusted operating profit totaled $786.4 million, increasing 10.4% from the prior-year quarter. The adjusted operating margin in the quarter expanded 107 bps to 18.9%.

Ecolab’s Financial Position

The company exited third-quarter 2025 with cash and cash equivalents of $1.96 billion compared with $1.92 billion at the end of the second quarter. Total debt at the end of third-quarter 2025 was $8.07 billion compared with $8.21 billion at the second-quarter end.

Meanwhile, Ecolab has a consistent dividend-paying history, with five-year annualized dividend growth of 7.15%.

ECL’s Guidance

Ecolab has provided its adjusted EPS outlook for the fourth quarter and has narrowed the 2025 outlook.

The company expects an adjusted EPS of $2.02-$2.12 for the fourth quarter, suggesting a 12-17% rally from the year-ago period’s actual. The Zacks Consensus Estimate is pegged at $2.08.

For 2025, Ecolab expects an adjusted EPS of $7.48-$7.58 (indicating an uptick of 12-14% from the comparable 2024 period’s reported number), narrowed from the earlier outlook of $7.42-$7.62 (implying a year-over-year uptick of 12-15%). The Zacks Consensus Estimate for adjusted EPS is pegged at $7.52.

Our Take on Ecolab

ECL exited the third quarter of 2025 with better-than-expected results. The company registered a robust year-over-year uptick in its top line, along with solid performances across all segments. The expansion of both margins bodes well for the stock.

Per management, the performance in Ecolab’s core businesses was led by a mid-single-digit rally in Institutional & Specialty, and accelerating Food & Beverage growth, as the company leveraged its innovations and the One Ecolab enterprise growth strategy. The company’s growth engines (which include Life Sciences, Pest Elimination, Global High-Tech and Ecolab Digital) collectively grew sales in the double digits. This looked promising for the stock.

However, the ongoing soft market demand in Ecolab’s underperforming businesses, Basic Industries and Paper, was disappointing.

ECL’s Zacks Rank & Key Picks

Ecolab currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space that are expected to report earnings soon are Doximity, Inc. DOCS, HealthEquity, Inc. HQY and IDEXX Laboratories, Inc. IDXX.

The Zacks Consensus Estimate for Doximity’s second-quarter fiscal 2026 adjusted EPS is pegged at 38 cents. The consensus estimate for revenues is pegged at $157.8 million. DOCS currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Doximity has an estimated long-term growth rate of 13.8%. DOCS’s earnings yield of 2.2% compares favorably with the industry’s negative yield.

HealthEquity currently has a Zacks Rank #2. The Zacks Consensus Estimate for its third-quarter fiscal 2025 adjusted EPS is pegged at 90 cents. The same for revenues is pegged at $319.9 million.

HealthEquity has an estimated long-term growth rate of 21.7%. HQY’s earnings yield of 4% compares favorably with the industry’s 3.7%.

IDEXX currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its third-quarter 2025 adjusted EPS is pegged at $3.14. The same for its revenues is pegged at $1.07 billion.

IDEXX has an estimated long-term growth rate of 12.3%. IDXX’s earnings yield of 1.9% compares favorably with the industry’s negative yield.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research