It has been about a month since the last earnings report for Ecolab (ECL). Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ecolab due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Ecolab Q2 Earnings and Revenues Beat Estimates
Ecolab has reported fourth-quarter 2025 adjusted earnings per share of $2.08, up 14.9% year over year. The bottom line surpassed the Zacks Consensus Estimate by 0.8%. GAAP earnings per share for the quarter was $1.98, up 19.3% year over year. Full-year adjusted earnings per share was $7.53, reflecting a 13.2% increase from the year-ago period. The metric topped the Zacks Consensus Estimate by a penny. ECL’s Revenue Details Revenues grossed $4.19 billion in the reported quarter, up 4.8% year over year. The metric topped the Zacks Consensus Estimate by 0.1%. Ecolab’s organic sales were $4 billion, up 2.9% from the prior-year period. Ecolab Digital sales increased 24% to $99 million, with double-digit growth across both software and enabling hardware subscriptions. Full-year revenues were $16.08 billion, reflecting a 2.2% improvement from the year-ago period on a reported basis (up 3% on an organic basis). The metric lagged the Zacks Consensus Estimate by 0.2%. Ecolab’s Segmental Analysis The Global Water segment’s fixed currency sales of $2.02 billion marked 2.5% year-over-year growth. Organic sales were $2 billion, up 2.2% year over year. The segment’s underlying sales grew mid-single digits, excluding Basic Industries and Paper. Light & Heavy’s progress was led by strength in Global High-Tech, improved growth in downstream and solid gains in manufacturing, which offset softer sales in Basic Industries. Robust new business gains in Food & Beverage, which leveraged the One Ecolab growth strategy, drove a further acceleration in sales growth. Lower Paper sales reflected new business wins that were offset by soft customer production rates. The Global Institutional & Specialty arm’s fixed currency sales were $1.49 billion, a year-over-year uptick of 2.8% on a reported basis. Organic sales were also $1.49 billion, up 2.7% year over year. Institutional unit’s underlying performance reflected good growth with hospitality customers and modestly higher sales to hospitals. Specialty unit delivered continued strong sales growth, driven by robust new business wins and continued value pricing. The Global Pest Elimination segment’s fixed currency sales of $307.2 million improved 6.7% year over year on a reported basis. Organic sales were $306.8 million, up 6.6% year over year. Strong organic sales growth was led by robust gains in food & beverage, restaurants and food retail, which continue to benefit from the One Ecolab growth strategy. The Global Life Sciences arm’s fixed currency sales and organic sales were $191.4 million each, reflecting year-over-year growth of 6.5% on both a reported and organic basis. Per management, year-over-year fixed currency and organic sales growth was driven by continued double-digit growth in bioprocessing and strong growth in pharmaceutical & personal care despite ongoing capacity constraints within Life Sciences’ industrial water purification business. ECL’s Q4 Margin Analysis In the quarter under review, Ecolab’s gross profit improved 6.4% year over year to $1.85 billion. The gross margin expanded 69 basis points (bps) to 44%. Selling, general and administrative expenses increased 1% year over year to $1.06 billion. Adjusted operating profit totaled $786.6 million, increasing 14.6% from the prior-year quarter. The adjusted operating margin in the quarter expanded 162 bps to 18.7%. Ecolab’s Financial Position The company exited fourth-quarter 2025 with cash and cash equivalents of $646.2 million compared with $1.96 billion at the end of the third quarter. Total debt at the end of fourth-quarter 2025 was $8.24 billion compared with $8.07 billion at third-quarter end. Meanwhile, Ecolab has a consistent dividend-paying history, with five-year annualized dividend growth of 8.09%. ECL’s Guidance for Q1 & 2026 Ecolab has provided its outlook for the first quarter and has initiated the full-year 2026 guidance. The company expects adjusted earnings per share of $1.67-$1.73 for the first quarter, suggesting an 11%-15% rally from the year-ago period’s actual. The Zacks Consensus Estimate is pegged at $1.69. Including the acquisition of Ovivo Electronics, ECL expects reported sales to increase 7%-9% and organic sales to rise 3%-4% in 2026. For 2026, Ecolab expects adjusted earnings per share of $8.43-$8.63 (indicating an uptick of 12%-15% from the comparable 2024 period’s reported number). The Zacks Consensus Estimate for adjusted earnings per share is pegged at $8.44.Ecolab has reported second-quarter 2026 adjusted earnings of $2.09 per share, up 10.6% year over year. The figure surpassed the Zacks Consensus Estimate by 0.4%.
GAAP earnings per share for the quarter was $1.90, up 3.3% year over year.
Revenues rose 9.7% year over year to $4.42 billion, surpassing the consensus estimate by 0.5%. Organic sales increased 5%, aided by stronger pricing, volume growth and solid demand across Ecolab’s core businesses and growth engines.
ECL’s Sales Growth Accelerates
Ecolab’s Digital sales increased 27% year over year to $121 million, driven by strong growth across software and enabling hardware subscriptions.
Organic sales were $4.28 billion, up 5% from $4.09 billion in the year-ago quarter. Reported volume increased 1% despite a nearly 1% headwind from customer operations disrupted by the Middle East conflict. Pricing improved to 4%, reflecting the initial benefits of the company’s energy surcharge implementation.
Ecolab’s Core Businesses Gain Momentum
The Global Water segment’s fixed-currency sales increased 10% year over year to $2.22 billion, including a 6% contribution from the Ovivo Electronics acquisition. Organic sales rose 4%, led by 29% growth in Global High-Tech and accelerating gains in Food & Beverage and Light Water.
Organic operating income for the segment increased 1% to $333.6 million. Improved pricing gradually offset higher commodity costs and growth-related investments. Meanwhile, the impact of softer demand in Heavy Water and Paper continued to ease on the back of new business wins.
The Global Institutional & Specialty segment’s fixed-currency and organic sales increased 4% each to $1.62 billion. Institutional benefited from improved growth among hospitality customers, while Specialty posted mid-single-digit growth, supported by share gains in quick-service restaurants and food retail.
ECL’s Growth Engines Stay Strong
The Global Pest Elimination segment’s fixed-currency sales rose 9% year over year to $350.5 million. Organic sales increased 7%, driven by strong gains across restaurants, food retail and food and beverage. Targeted acquisitions in North America contributed 2% to growth.
The segment’s organic operating income increased 12% year over year to $70.3 million. Strong sales growth and improved productivity more than offset continued investments in the business, including pest intelligence capabilities.
The Global Life Sciences segment’s fixed-currency and organic sales increased 15% each to $221 million. The improvement was driven by continued share gains in bioprocessing and pharmaceutical and personal care, along with better performance in purification.
Organic operating income surged 46% year over year to $58.5 million, reflecting accelerated sales growth and strong bioprocessing performance. These gains more than offset higher commodity costs and investments in innovation, capacity and global capabilities.
ECL’s Margin Analysis
In the quarter under review, Ecolab’s reported gross profit increased 8% year over year to $1.95 billion. However, the reported gross margin contracted 70 basis points (bps) to 44.1%. Adjusted gross margin declined 60 bps to 44.2%, reflecting the impact of the Ovivo Electronics acquisition. Organic gross margin improved 10 bps to 44.9% as stronger pricing offset rising commodity costs.
Selling, general and administrative expenses increased 6.9% year over year to $1.14 billion.
Adjusted operating profit totaled $809 million, up 9.7% from the prior-year quarter. The adjusted operating margin remained unchanged at 18.3%, while the organic operating margin expanded 40 bps to 18.8%.
Ecolab’s Financial Position
Ecolab exited the second quarter of 2026 with cash and cash equivalents of $5.14 billion, up sharply from $519.8 million at the end of the first quarter. Total debt increased to $13.18 billion from $8.49 billion over the same period.
The sequential jump in cash appears to be primarily financing-driven. Ecolab raised new debt to fund recent acquisitions, including CoolIT, and a portion of those proceeds was likely still held in cash at quarter-end. Net interest expense also increased to $73.1 million from $63.2 million a year earlier, reflecting the impact of acquisition-related borrowings. Ecolab repurchased approximately 1.2 million shares during the quarter.
Meanwhile, Ecolab has a consistent dividend-paying history, with five-year annualized dividend growth of 8.75%.
ECL Raises 2026 Earnings Outlook
Ecolab raised its 2026 adjusted earnings guidance to $8.05-$8.25 per share from $8.03-$8.23. The revised range indicates growth of 7%-10% and incorporates short-term non-cash amortization and financing costs related to the CoolIT acquisition.
For the third quarter, ECL expects adjusted earnings of $2.13-$2.23 per share, representing growth of 3%-8%. In the second half, reported sales are projected to increase 12%-14%, while organic sales growth is expected to accelerate to 6%-7%.
Management expects second-half adjusted operating margin of approximately 19% and organic operating margin of about 20%. Accelerating pricing, ongoing share gains and improved productivity are expected to support the outlook.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates review.
VGM Scores
Currently, Ecolab has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Ecolab has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Ecolab belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Element Solutions (ESI), has gained 3.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Element Solutions reported revenues of $977.9 million in the last reported quarter, representing a year-over-year change of +56.4%. EPS of $0.47 for the same period compares with $0.37 a year ago.
For the current quarter, Element Solutions is expected to post earnings of $0.48 per share, indicating a change of +17.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.3% over the last 30 days.
Element Solutions has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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This article originally published on Zacks Investment Research (zacks.com).