Is Ecolab Inc (ECL) overvalued?
On Equity Rank's model estimate, ECL trades 85% above its fair value. Ecolab Inc (ECL) last closed at $300.68; the multi-method model fair value is $162.29.
| Price | Model fair value | Price vs model |
|---|---|---|
| $300.68 | $162.29 | 85% above |
What the answer rests on
- 0 of 9 valuation methods put ECL's value above its price and 9 put it below, so the methods mostly agree.
- To justify today's price, ECL's free cash flow would need to grow about 15.9% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 21.0% a year.
- ECL trades at 42.9 times its last year's earnings, against a median of 26.4 for 26 profitable Specialty Chemicals companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 28% above to 88% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind ECL's fair value · What prices assume · Other companies