Here's Why You Should Retain Ecolab Stock in Your Portfolio Now

Ecolab Inc. ECL has been gaining from its solid product portfolio. The optimism, led by a solid first-quarter 2025 performance and continued focus on research and development, is expected to contribute further. However, macroeconomic concerns persist.

This Zacks Rank #3 (Hold) stock has gained 9.2% in the year-to-date period compared with the industry’s 2.7% growth. The S&P 500 Composite has remained flat during the same time frame.

The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $70.9 billion. It projects 13.6% growth for the next five years and expects to maintain a strong performance in the future. Ecolab’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 0.72%.

Reasons Favoring Ecolab’s Growth

Ecolab’s Global High-Tech Business & Digital Platform: Ecolab is accelerating its transformation through two key high-growth, high-margin drivers: its Global High-Tech business and the Ecolab Digital Platform. The Global High-Tech segment, which caters to data centers and the microelectronics industry, has exceeded $300 million in annual sales with operating margins of more than 20%, fueled by increasing demand for liquid cooling systems amid the expansion of AI-driven infrastructure. Complementing this, the Ecolab Digital Platform integrates IoT, AI, and cloud analytics across more than 100,000 customer systems, capturing over 120 billion data points in 2024. This platform boosts recurring revenue by optimizing water, energy, and hygiene performance, while also enhancing service productivity and margins through remote monitoring and predictive maintenance capabilities.

Strong Product Portfolio With a Focus on R&D: Ecolab's broad range of offerings, including water treatment, hygiene, life sciences, digital technologies, and pest control, provides a strong competitive edge, supported by ongoing R&D investments. The global water treatment systems market, worth $38.56 billion in 2023, is expected to expand at a CAGR of 8.1% through 2030, presenting substantial growth opportunities.

Ecolab’s cutting-edge solutions, such as the 3D TRASAR AI Dishmachine Program and the Ecolab 3D Cloud platform, integrate IoT and AI to enhance efficiency and performance. The company’s acquisition of Purolite has strengthened its ultra-purification portfolio, catering to increasing needs in biopharma and gene therapy production. With a focus on innovation and a capital expenditure-driven growth strategy, Ecolab is well-positioned as a tech leader in lucrative, fast-growing markets.

Strong Q1 Results: Ecolab exited the first quarter of 2025 with mixed results. Earnings remained in line with the consensus estimate and revenues missed the same. However, the company registered a robust year-over-year uptick in its organic sales and bottom line, along with solid performances across most of its segments. The expansion of operating margin bodes well for the stock.

Per management, growth in the United States (ECL’s largest and most profitable region) continued to be strong, and growth across the rest of the world was also solid, as the company was able to offset uneven macroeconomic trends. This looked promising for the stock.

A Factor That May Offset ECL’s Gains

Macroeconomic Factors: Ecolab's operations across 170 countries expose it to geopolitical, economic, and currency-related risks. The company has limited its Russian business to essential life-supporting operations amid the Ukraine conflict, which is impacting revenue and may lead to further scaling back based on future developments. Past disruptions, such as the COVID-19 pandemic, supply-chain challenges, inflation, and high interest rates, have also pressured profitability. In 2025, currency translation is expected to reduce reported sales by 3% and adjusted earnings per share (EPS) by 4%, posing a headwind that could disproportionately affect margins in lower-profit international markets despite improvements in core business performance.

Estimate Trend

Ecolab is witnessing a negative estimate revision trend for 2025. In the past 60 days, the Zacks Consensus Estimate for its earnings has moved 3 cents south to $7.51 per share.

The Zacks Consensus Estimate for the company’s second-quarter 2025 revenues is pegged at $4 billion, indicating a 0.5% improvement from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space that have announced quarterly results are CVS Health Corporation CVS, Integer Holdings Corporation ITGR and AngioDynamics ANGO.

CVS Health, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2025 adjusted earnings per share (EPS) of $2.25, beating the Zacks Consensus Estimate by 31.6%. Revenues of $94.59 billion outpaced the consensus mark by 1.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CVS Health has a long-term estimated growth rate of 11.4%. CVS’s earnings surpassed estimates in each of the trailing four quarters, with an average surprise of 18.1%.

Integer Holdings reported first-quarter 2025 adjusted EPS of $1.31, beating the Zacks Consensus Estimate by 3.2%. Revenues of $437.4 million surpassed the Zacks Consensus Estimate by 1.3%. It currently sports a Zacks Rank #1.

Integer Holdings has a long-term estimated growth rate of 18.4%. ITGR’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.

AngioDynamics, currently sporting a Zacks Rank #1, reported a third-quarter fiscal 2025 adjusted EPS of 3 cents against the Zacks Consensus Estimate of a 13-cent loss. Revenues of $72 million beat the Zacks Consensus Estimate by 2%.

ANGO has an estimated fiscal 2026 earnings growth rate of 27.8% compared with the S&P 500 Composite’s 10.5% growth. The company surpassed earnings estimates in each of the trailing four quarters, with the average surprise being 70.9%.

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

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