Ecolab Inc. (ECL): A Bull Case Theory

We came across a bullish thesis on Ecolab Inc. on The Buyside Guy’s Substack. In this article, we will summarize the bulls’ thesis on ECL. Ecolab Inc.’s share was trading at $264.28 as of August 4^th. ECL’s trailing and forward P/E were 34.89 and 34.72, respectively according to Yahoo Finance.

Ecolab (ECL) is a $60B+ global leader in essential cleaning, sanitation, and water treatment services, deeply embedded in critical industries such as foodservice, hospitality, healthcare, manufacturing, and chemical plants. Its offerings go far beyond cleaning products, providing mission-critical solutions for water purification, disinfectants, pest elimination, and safety compliance. Ecolab operates a highly resilient razor-blade model—selling equipment at low cost while locking customers into recurring purchases of proprietary chemicals and consumables. This approach drives 92% recurring revenue, creating strong retention and stable margins. The company’s performance during crises underscores its durability, with EPS growing through the Global Financial Crisis and COVID, proving its offerings are non-discretionary.

Growth catalysts further strengthen the investment case. Ecolab is positioned to benefit from data center expansion, with water treatment solutions generating an estimated $500M–$800M today within a $5B addressable market. Its “One Ecolab” digital strategy enhances operational visibility through IoT-enabled rodent sensors, water and energy usage monitoring, and QSR tracking software, contributing $320M in annualized digital revenue with strong momentum. Additionally, recent pricing surcharges demonstrate Ecolab’s pricing power, supporting margin expansion.

While trading at ~31x 2026 P/E—above its 10-year average (~27x)—the premium reflects Ecolab’s quality, resilience, and growth potential. Valuation becomes more compelling around $225–$230 for long-term investors seeking essential, cash-generative businesses. With strong recurring revenue, structural tailwinds from digital and data center growth, and unmatched stickiness across industries, Ecolab represents a defensive compounder worth monitoring closely for opportunistic entry.

Previously we covered a bullish thesis on Ecolab Inc. by RadnorCapital in November 2024, highlighting margin expansion and water solutions for data centers. The stock has appreciated ~7% as the thesis played out with pricing momentum. The thesis still stands given strong growth drivers. The Buyside Guy shares a similar view but emphasizes Ecolab’s razor-blade recurring revenue model and digital initiatives as key catalysts.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None.