Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Ecolab Inc., current price multiples
| Ecolab Inc. | Linde plc | Sherwin-Williams Co. | Chemicals | Materials | ||||
|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||
| Current share price (P) | $180.30 | |||||||
| No. shares of common stock outstanding | 286,751,531 | |||||||
| Growth rate (g) | 11.49% | |||||||
| Earnings per share (EPS) | $3.94 | |||||||
| Next year expected EPS | $4.39 | |||||||
| Operating profit per share | $5.57 | |||||||
| Sales per share | $44.40 | |||||||
| Book value per share (BVPS) | $25.19 | |||||||
| Valuation Ratios (Price Multiples) | ||||||||
| Price to earnings (P/E) | 45.76 | 31.37 | 30.32 | 51.72 | 39.39 | |||
| Price to next year expected earnings | 41.04 | 29.23 | 20.63 | 48.66 | 35.48 | |||
| Price-earnings-growth (PEG) | 3.98 | 4.29 | 0.65 | 8.25 | 3.57 | |||
| Price to operating profit (P/OP) | 32.34 | 24.25 | 20.42 | 39.01 | 24.75 | |||
| Price to sales (P/S) | 4.06 | 6.37 | 3.30 | 5.80 | 5.35 | |||
| Price to book value (P/BV) | 7.16 | 5.66 | 16.93 | 6.33 | 6.51 | |||
Based on: 10-K (reporting date: 2021-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Ecolab Inc., historical price multiples
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The valuation multiples for the period between 2017 and 2021 exhibit a general upward trajectory, indicating a substantial expansion in the market's valuation relative to the company's financial fundamentals. A pronounced peak across multiple ratios occurred in 2020, suggesting a period of significant market re-rating or a temporary compression of underlying performance metrics relative to the share price.
- Price to Earnings (P/E)
- The P/E ratio demonstrates a strong growth trend, increasing from 25.06 in 2017 to 45.76 by 2021. While the ratio remained relatively stable between 2018 and 2019, the significant rise by the end of the period indicates that investors were willing to pay a progressively higher premium for each dollar of net income.
- Price to Operating Profit (P/OP)
- The P/OP ratio rose steadily from 18.71 in 2017 to a peak of 42.88 in 2020. Although there was a subsequent correction to 32.34 in 2021, the valuation remains considerably higher than the 2017 baseline, reflecting an increased premium placed on operating efficiency and profitability.
- Price to Sales (P/S)
- A consistent expansion is observed in the P/S ratio, which climbed from 2.73 in 2017 to a peak of 5.08 in 2020. The ratio moderated to 4.06 in 2021, yet it maintains a level significantly above the initial 2017 value, suggesting a sustained increase in the value attributed to each unit of revenue.
- Price to Book Value (P/BV)
- The P/BV ratio increased from 4.96 in 2017, reaching a maximum of 9.70 in 2020 before retreating to 7.16 in 2021. This movement indicates that the market price of the stock grew at a much faster rate than the company's book value over the five-year period.
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Price to Earnings (P/E)
Ecolab Inc., historical P/E calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 286,751,531 | 285,849,956 | 288,166,440 | 287,853,232 | 288,858,441 | |
| Selected Financial Data (US$) | ||||||
| Net income (loss) attributable to Ecolab (in thousands) | 1,129,900) | (1,205,100) | 1,558,900) | 1,429,100) | 1,508,400) | |
| Earnings per share (EPS)2 | 3.94 | -4.22 | 5.41 | 4.96 | 5.22 | |
| Share price1, 3 | 180.30 | 209.36 | 180.45 | 170.16 | 130.84 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 45.76 | — | 33.36 | 34.27 | 25.06 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Linde plc | 38.92 | — | — | — | — | |
| Sherwin-Williams Co. | 37.32 | — | — | — | — | |
| P/E Ratio, Sector | ||||||
| Chemicals | 38.39 | — | — | — | — | |
| P/E Ratio, Industry | ||||||
| Materials | 28.21 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
EPS = Net income (loss) attributable to Ecolab ÷ No. shares of common stock outstanding
= 1,129,900,000 ÷ 286,751,531 = 3.94
3 Closing price as at the filing date of Ecolab Inc. Annual Report.
4 2021 Calculation
P/E ratio = Share price ÷ EPS
= 180.30 ÷ 3.94 = 45.76
5 Click competitor name to see calculations.
An analysis of valuation metrics from 2017 to 2021 reveals a significant expansion in the price-to-earnings multiple, coinciding with notable volatility in earnings performance.
- Share Price Trends
- The share price demonstrated a consistent upward trajectory from 2017 through 2020, climbing from 130.84 to a peak of 209.36. A subsequent correction occurred in 2021, with the price decreasing to 180.30, returning to a level comparable to that of 2019.
- Earnings Per Share (EPS) Performance
- Earnings remained relatively stable between 2017 and 2019, ranging from 4.96 to 5.41. A severe contraction occurred in 2020, where EPS fell to -4.22. Although earnings returned to positive territory in 2021 at 3.94, this recovery did not reach the pre-2020 benchmarks.
- Price-to-Earnings (P/E) Ratio Interpretation
- The P/E ratio expanded substantially over the observed period, moving from 25.06 in 2017 to 45.76 in 2021. There was a sharp increase in the multiple in 2018, which remained elevated through 2019. The ratio was not applicable in 2020 due to negative earnings. The peak P/E ratio observed in 2021 suggests that the market maintained a high valuation for the stock despite the EPS not yet returning to its 2017-2019 levels, indicating strong investor confidence or expectations of future growth.
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Price to Operating Profit (P/OP)
Ecolab Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 286,751,531 | 285,849,956 | 288,166,440 | 287,853,232 | 288,858,441 | |
| Selected Financial Data (US$) | ||||||
| Operating income (in thousands) | 1,598,600) | 1,395,700) | 2,013,800) | 1,947,000) | 2,019,800) | |
| Operating profit per share2 | 5.57 | 4.88 | 6.99 | 6.76 | 6.99 | |
| Share price1, 3 | 180.30 | 209.36 | 180.45 | 170.16 | 130.84 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 32.34 | 42.88 | 25.82 | 25.16 | 18.71 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Linde plc | 29.87 | — | — | — | — | |
| Sherwin-Williams Co. | 27.19 | — | — | — | — | |
| P/OP Ratio, Sector | ||||||
| Chemicals | 28.96 | — | — | — | — | |
| P/OP Ratio, Industry | ||||||
| Materials | 17.73 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 1,598,600,000 ÷ 286,751,531 = 5.57
3 Closing price as at the filing date of Ecolab Inc. Annual Report.
4 2021 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 180.30 ÷ 5.57 = 32.34
5 Click competitor name to see calculations.
The valuation metrics for the period between 2017 and 2021 indicate a significant expansion in the price-to-operating profit (P/OP) multiple, driven by a combination of share price appreciation and volatile operating performance.
- Share Price Trends
- The share price exhibited a consistent upward trajectory from 2017 to 2020, rising from 130.84 US$ to a peak of 209.36 US$. A correction occurred in 2021, with the price contracting to 180.30 US$, marking a decline from the 2020 high but remaining substantially above 2017 levels.
- Operating Profit per Share Performance
- Operating profit per share remained relatively stable between 2017 and 2019, fluctuating slightly between 6.76 US$ and 6.99 US$. A sharp decline was observed in 2020, with the value dropping to 4.88 US$. A partial recovery followed in 2021, as the figure rose to 5.57 US$, although it did not return to pre-2020 levels.
- P/OP Ratio Dynamics
- The P/OP ratio underwent a substantial expansion, moving from 18.71 in 2017 to a peak of 42.88 in 2020. This surge was primarily driven by the inverse correlation between the peaking share price and the trough in operating profit per share during 2020. In 2021, the ratio compressed to 32.34, reflecting a simultaneous decrease in share price and an increase in operating profitability.
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Price to Sales (P/S)
Ecolab Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 286,751,531 | 285,849,956 | 288,166,440 | 287,853,232 | 288,858,441 | |
| Selected Financial Data (US$) | ||||||
| Net sales (in thousands) | 12,733,100) | 11,790,200) | 14,906,300) | 14,668,200) | 13,838,300) | |
| Sales per share2 | 44.40 | 41.25 | 51.73 | 50.96 | 47.91 | |
| Share price1, 3 | 180.30 | 209.36 | 180.45 | 170.16 | 130.84 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 4.06 | 5.08 | 3.49 | 3.34 | 2.73 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Linde plc | 4.84 | — | — | — | — | |
| Sherwin-Williams Co. | 3.49 | — | — | — | — | |
| P/S Ratio, Sector | ||||||
| Chemicals | 4.31 | — | — | — | — | |
| P/S Ratio, Industry | ||||||
| Materials | 3.83 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Sales per share = Net sales ÷ No. shares of common stock outstanding
= 12,733,100,000 ÷ 286,751,531 = 44.40
3 Closing price as at the filing date of Ecolab Inc. Annual Report.
4 2021 Calculation
P/S ratio = Share price ÷ Sales per share
= 180.30 ÷ 44.40 = 4.06
5 Click competitor name to see calculations.
The valuation of the common stock exhibits a general expansion in the price-to-sales multiple over the five-year period from 2017 to 2021, characterized by a significant peak in 2020 followed by a partial correction.
- Share Price Trajectory
- A consistent upward trend is observed from 2017 through 2020, with the share price rising from 130.84 US$ to a peak of 209.36 US$. A subsequent decline occurred in 2021, bringing the price to 180.30 US$, effectively returning the valuation to levels seen in 2019.
- Sales per Share Performance
- Revenue efficiency grew steadily between 2017 and 2019, peaking at 51.73 US$. However, a sharp contraction occurred in 2020, where sales per share dropped to 41.25 US$. A modest recovery was noted in 2021, with values increasing to 44.40 US$, although they remained below the 2019 peak.
- Price-to-Sales (P/S) Ratio Analysis
- The P/S ratio increased from 2.73 in 2017 to 3.49 in 2019, indicating a rising market premium relative to revenue. This trend accelerated sharply in 2020, reaching a maximum ratio of 5.08. This spike was driven by the divergence between a peaking share price and a simultaneous decline in sales per share. By 2021, the ratio moderated to 4.06, reflecting a realignment of the share price with the recovering revenue base.
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Price to Book Value (P/BV)
Ecolab Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 286,751,531 | 285,849,956 | 288,166,440 | 287,853,232 | 288,858,441 | |
| Selected Financial Data (US$) | ||||||
| Total Ecolab shareholders’ equity (in thousands) | 7,224,200) | 6,166,500) | 8,685,300) | 8,003,200) | 7,618,500) | |
| Book value per share (BVPS)2 | 25.19 | 21.57 | 30.14 | 27.80 | 26.37 | |
| Share price1, 3 | 180.30 | 209.36 | 180.45 | 170.16 | 130.84 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 7.16 | 9.70 | 5.99 | 6.12 | 4.96 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Linde plc | 3.38 | — | — | — | — | |
| Sherwin-Williams Co. | 28.55 | — | — | — | — | |
| P/BV Ratio, Sector | ||||||
| Chemicals | 4.70 | — | — | — | — | |
| P/BV Ratio, Industry | ||||||
| Materials | 4.66 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
BVPS = Total Ecolab shareholders’ equity ÷ No. shares of common stock outstanding
= 7,224,200,000 ÷ 286,751,531 = 25.19
3 Closing price as at the filing date of Ecolab Inc. Annual Report.
4 2021 Calculation
P/BV ratio = Share price ÷ BVPS
= 180.30 ÷ 25.19 = 7.16
5 Click competitor name to see calculations.
The valuation of the common stock between 2017 and 2021 was characterized by a significant expansion in the market premium relative to the company's accounting value. The Price to Book Value (P/BV) ratio exhibited a general upward trend, peaking in 2020 before experiencing a moderate contraction in 2021.
- Share Price Dynamics
- A consistent growth trajectory was observed in the share price from 2017 through 2020, ascending from US$ 130.84 to a maximum of US$ 209.36. This upward movement was interrupted in 2021, as the price declined to US$ 180.30.
- Book Value per Share (BVPS) Performance
- The BVPS showed steady growth from US$ 26.37 in 2017 to US$ 30.14 in 2019. A significant reversal occurred in 2020, with the BVPS dropping to US$ 21.57. A partial recovery was noted in 2021, with the value rising back to US$ 25.19.
- Price to Book Value (P/BV) Interpretation
- The P/BV ratio rose from 4.96 in 2017 to 5.99 in 2019, suggesting increasing investor confidence in the company's intangible assets or future earning potential. The ratio reached a peak of 9.70 in 2020, a spike resulting from the combination of the highest share price and the lowest BVPS in the period. By 2021, the ratio moderated to 7.16, reflecting the synchronized decrease in share price and the recovery of the book value per share.
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