Intrinsic value of Ecolab - ECL

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$129.37

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$129.37

 
Intrinsic value

$45.01

 
Up/down potential

-65%

 
Rating

str. sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ECL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 37.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -2.89
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  13,153
  13,416
  13,725
  14,077
  14,473
  14,912
  15,394
  15,918
  16,485
  17,097
  17,753
  18,455
  19,204
  20,001
  20,849
  21,748
  22,701
  23,710
  24,777
  25,904
  27,094
  28,350
  29,675
  31,071
  32,542
  34,091
  35,722
  37,439
  39,246
  41,146
  43,146
Variable operating expenses, $m
 
  11,860
  12,119
  12,414
  12,745
  13,112
  13,515
  13,953
  14,428
  14,939
  15,488
  15,437
  16,063
  16,730
  17,439
  18,192
  18,989
  19,833
  20,725
  21,668
  22,664
  23,714
  24,822
  25,990
  27,220
  28,516
  29,881
  31,317
  32,828
  34,418
  36,090
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  11,238
  11,860
  12,119
  12,414
  12,745
  13,112
  13,515
  13,953
  14,428
  14,939
  15,488
  15,437
  16,063
  16,730
  17,439
  18,192
  18,989
  19,833
  20,725
  21,668
  22,664
  23,714
  24,822
  25,990
  27,220
  28,516
  29,881
  31,317
  32,828
  34,418
  36,090
Operating income, $m
  1,915
  1,556
  1,606
  1,664
  1,729
  1,800
  1,879
  1,965
  2,058
  2,158
  2,265
  3,018
  3,140
  3,271
  3,409
  3,556
  3,712
  3,877
  4,052
  4,236
  4,431
  4,636
  4,853
  5,081
  5,322
  5,575
  5,842
  6,122
  6,418
  6,729
  7,056
EBITDA, $m
  2,766
  2,654
  2,715
  2,785
  2,863
  2,950
  3,045
  3,149
  3,261
  3,382
  3,512
  3,651
  3,799
  3,957
  4,124
  4,302
  4,491
  4,690
  4,901
  5,124
  5,360
  5,608
  5,870
  6,146
  6,437
  6,744
  7,066
  7,406
  7,763
  8,139
  8,535
Interest expense (income), $m
  267
  260
  269
  280
  292
  306
  321
  337
  356
  375
  396
  419
  443
  469
  497
  526
  557
  590
  625
  662
  701
  742
  785
  831
  879
  930
  983
  1,040
  1,099
  1,162
  1,227
Earnings before tax, $m
  1,650
  1,296
  1,337
  1,384
  1,437
  1,495
  1,558
  1,627
  1,702
  1,782
  1,869
  2,599
  2,697
  2,802
  2,913
  3,031
  3,155
  3,287
  3,427
  3,574
  3,730
  3,894
  4,068
  4,250
  4,442
  4,645
  4,858
  5,083
  5,319
  5,567
  5,828
Tax expense, $m
  403
  350
  361
  374
  388
  404
  421
  439
  460
  481
  505
  702
  728
  756
  786
  818
  852
  888
  925
  965
  1,007
  1,051
  1,098
  1,148
  1,199
  1,254
  1,312
  1,372
  1,436
  1,503
  1,574
Net income, $m
  1,230
  946
  976
  1,010
  1,049
  1,091
  1,137
  1,188
  1,242
  1,301
  1,364
  1,897
  1,969
  2,045
  2,126
  2,212
  2,303
  2,400
  2,502
  2,609
  2,723
  2,843
  2,969
  3,103
  3,243
  3,391
  3,546
  3,710
  3,883
  4,064
  4,255

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  347
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,330
  18,353
  18,775
  19,258
  19,799
  20,400
  21,058
  21,775
  22,552
  23,388
  24,286
  25,246
  26,271
  27,361
  28,521
  29,751
  31,055
  32,435
  33,895
  35,437
  37,065
  38,783
  40,595
  42,505
  44,517
  46,636
  48,868
  51,216
  53,688
  56,288
  59,023
Adjusted assets (=assets-cash), $m
  17,983
  18,353
  18,775
  19,258
  19,799
  20,400
  21,058
  21,775
  22,552
  23,388
  24,286
  25,246
  26,271
  27,361
  28,521
  29,751
  31,055
  32,435
  33,895
  35,437
  37,065
  38,783
  40,595
  42,505
  44,517
  46,636
  48,868
  51,216
  53,688
  56,288
  59,023
Revenue / Adjusted assets
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
Average production assets, $m
  7,261
  7,406
  7,576
  7,771
  7,989
  8,231
  8,497
  8,787
  9,100
  9,437
  9,800
  10,187
  10,600
  11,041
  11,509
  12,005
  12,531
  13,088
  13,677
  14,299
  14,956
  15,649
  16,381
  17,151
  17,963
  18,818
  19,719
  20,666
  21,664
  22,713
  23,816
Working capital, $m
  1,260
  1,489
  1,523
  1,563
  1,607
  1,655
  1,709
  1,767
  1,830
  1,898
  1,971
  2,048
  2,132
  2,220
  2,314
  2,414
  2,520
  2,632
  2,750
  2,875
  3,007
  3,147
  3,294
  3,449
  3,612
  3,784
  3,965
  4,156
  4,356
  4,567
  4,789
Total debt, $m
  6,687
  6,563
  6,823
  7,121
  7,454
  7,824
  8,230
  8,672
  9,150
  9,665
  10,218
  10,809
  11,441
  12,113
  12,827
  13,585
  14,388
  15,238
  16,137
  17,087
  18,090
  19,148
  20,264
  21,441
  22,680
  23,986
  25,360
  26,807
  28,330
  29,931
  31,616
Total liabilities, $m
  11,429
  11,305
  11,565
  11,863
  12,196
  12,566
  12,972
  13,414
  13,892
  14,407
  14,960
  15,551
  16,183
  16,855
  17,569
  18,327
  19,130
  19,980
  20,879
  21,829
  22,832
  23,890
  25,006
  26,183
  27,422
  28,728
  30,102
  31,549
  33,072
  34,673
  36,358
Total equity, $m
  6,901
  7,048
  7,210
  7,395
  7,603
  7,833
  8,086
  8,362
  8,660
  8,981
  9,326
  9,694
  10,088
  10,507
  10,952
  11,424
  11,925
  12,455
  13,016
  13,608
  14,233
  14,893
  15,588
  16,322
  17,094
  17,908
  18,765
  19,667
  20,616
  21,614
  22,665
Total liabilities and equity, $m
  18,330
  18,353
  18,775
  19,258
  19,799
  20,399
  21,058
  21,776
  22,552
  23,388
  24,286
  25,245
  26,271
  27,362
  28,521
  29,751
  31,055
  32,435
  33,895
  35,437
  37,065
  38,783
  40,594
  42,505
  44,516
  46,636
  48,867
  51,216
  53,688
  56,287
  59,023
Debt-to-equity ratio
  0.969
  0.930
  0.950
  0.960
  0.980
  1.000
  1.020
  1.040
  1.060
  1.080
  1.100
  1.120
  1.130
  1.150
  1.170
  1.190
  1.210
  1.220
  1.240
  1.260
  1.270
  1.290
  1.300
  1.310
  1.330
  1.340
  1.350
  1.360
  1.370
  1.380
  1.390
Adjusted equity ratio
  0.366
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,230
  946
  976
  1,010
  1,049
  1,091
  1,137
  1,188
  1,242
  1,301
  1,364
  1,897
  1,969
  2,045
  2,126
  2,212
  2,303
  2,400
  2,502
  2,609
  2,723
  2,843
  2,969
  3,103
  3,243
  3,391
  3,546
  3,710
  3,883
  4,064
  4,255
Depreciation, amort., depletion, $m
  851
  1,098
  1,109
  1,121
  1,135
  1,150
  1,166
  1,184
  1,204
  1,224
  1,247
  633
  658
  686
  715
  746
  778
  813
  849
  888
  929
  972
  1,017
  1,065
  1,116
  1,169
  1,225
  1,284
  1,346
  1,411
  1,479
Funds from operations, $m
  1,969
  2,044
  2,085
  2,131
  2,183
  2,241
  2,304
  2,372
  2,446
  2,526
  2,611
  2,530
  2,627
  2,731
  2,841
  2,958
  3,082
  3,213
  3,351
  3,498
  3,652
  3,815
  3,987
  4,168
  4,359
  4,560
  4,771
  4,994
  5,228
  5,475
  5,734
Change in working capital, $m
  29
  29
  34
  39
  44
  49
  53
  58
  63
  68
  73
  78
  83
  89
  94
  100
  106
  112
  118
  125
  132
  139
  147
  155
  163
  172
  181
  191
  201
  211
  222
Cash from operations, $m
  1,940
  1,937
  2,051
  2,092
  2,139
  2,192
  2,250
  2,314
  2,383
  2,458
  2,538
  2,452
  2,544
  2,642
  2,747
  2,858
  2,976
  3,101
  3,233
  3,372
  3,520
  3,676
  3,840
  4,013
  4,195
  4,388
  4,590
  4,803
  5,028
  5,264
  5,512
Maintenance CAPEX, $m
  0
  -451
  -460
  -471
  -483
  -496
  -511
  -528
  -546
  -565
  -586
  -609
  -633
  -658
  -686
  -715
  -746
  -778
  -813
  -849
  -888
  -929
  -972
  -1,017
  -1,065
  -1,116
  -1,169
  -1,225
  -1,284
  -1,346
  -1,411
New CAPEX, $m
  -757
  -145
  -170
  -195
  -219
  -242
  -266
  -289
  -313
  -337
  -362
  -387
  -413
  -440
  -468
  -496
  -526
  -557
  -589
  -622
  -657
  -693
  -731
  -771
  -812
  -855
  -900
  -948
  -997
  -1,049
  -1,104
Cash from investing activities, $m
  -830
  -596
  -630
  -666
  -702
  -738
  -777
  -817
  -859
  -902
  -948
  -996
  -1,046
  -1,098
  -1,154
  -1,211
  -1,272
  -1,335
  -1,402
  -1,471
  -1,545
  -1,622
  -1,703
  -1,788
  -1,877
  -1,971
  -2,069
  -2,173
  -2,281
  -2,395
  -2,515
Free cash flow, $m
  1,110
  1,341
  1,420
  1,427
  1,438
  1,454
  1,473
  1,497
  1,524
  1,555
  1,590
  1,456
  1,498
  1,544
  1,593
  1,647
  1,704
  1,765
  1,831
  1,901
  1,975
  2,053
  2,137
  2,225
  2,318
  2,417
  2,521
  2,631
  2,747
  2,869
  2,998
Issuance/(repayment) of debt, $m
  214
  223
  260
  297
  334
  370
  406
  442
  478
  515
  553
  592
  631
  672
  714
  758
  803
  850
  899
  950
  1,003
  1,058
  1,116
  1,176
  1,240
  1,305
  1,375
  1,447
  1,522
  1,602
  1,685
Issuance/(repurchase) of shares, $m
  -663
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -440
  223
  260
  297
  334
  370
  406
  442
  478
  515
  553
  592
  631
  672
  714
  758
  803
  850
  899
  950
  1,003
  1,058
  1,116
  1,176
  1,240
  1,305
  1,375
  1,447
  1,522
  1,602
  1,685
Total cash flow (excl. dividends), $m
  663
  1,565
  1,680
  1,724
  1,772
  1,823
  1,879
  1,938
  2,002
  2,070
  2,143
  2,047
  2,129
  2,216
  2,308
  2,405
  2,507
  2,616
  2,730
  2,851
  2,978
  3,112
  3,253
  3,401
  3,558
  3,722
  3,895
  4,078
  4,269
  4,471
  4,682
Retained Cash Flow (-), $m
  9
  -147
  -162
  -185
  -208
  -230
  -253
  -275
  -298
  -321
  -345
  -369
  -393
  -419
  -445
  -472
  -501
  -530
  -560
  -592
  -625
  -660
  -696
  -733
  -773
  -814
  -857
  -902
  -949
  -998
  -1,050
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,418
  1,518
  1,539
  1,564
  1,593
  1,626
  1,663
  1,704
  1,749
  1,798
  1,679
  1,736
  1,797
  1,862
  1,932
  2,007
  2,086
  2,170
  2,258
  2,352
  2,452
  2,557
  2,668
  2,785
  2,908
  3,039
  3,176
  3,320
  3,472
  3,632
Discount rate, %
 
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
 
  1,325
  1,317
  1,231
  1,145
  1,059
  973
  888
  804
  721
  641
  512
  447
  385
  328
  276
  228
  186
  149
  117
  91
  69
  51
  37
  26
  18
  12
  8
  5
  3
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Ecolab Inc. provides water, hygiene, and energy technologies and services for customers worldwide. The company operates in three segments: Global Industrial, Global Institutional, and Global Energy. The Global Industrial segment provides water treatment and process applications, and cleaning and sanitizing solutions primarily to large industrial customers within the manufacturing, food and beverage processing, chemical, mining and primary metals, power generation, pulp and paper, and commercial laundry industries. The Global Institutional segment offers specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, healthcare, government and education, and retail industries. The Global Energy segment provides the process chemicals and water treatment needs of the petroleum and petrochemical industries in upstream and downstream applications. The company also offers pest elimination services to detect, eliminate, and prevent pests, such as rodents and insects, in restaurants, food and beverage processors, educational and healthcare facilities, hotels, quick service restaurant and grocery operations, and other institutional and commercial customers; and equipment repair, maintenance, and preventive maintenance services for the commercial food service industry. Ecolab Inc. sells its products through field sales personnel, corporate account personnel, distributors, and dealers. Ecolab Inc. was founded in 1923 and is headquartered in St. Paul, Minnesota.

FINANCIAL RATIOS  of  Ecolab (ECL)

Valuation Ratios
P/E Ratio 30.7
Price to Sales 2.9
Price to Book 5.5
Price to Tangible Book
Price to Cash Flow 19.5
Price to Free Cash Flow 31.9
Growth Rates
Sales Growth Rate -2.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.1%
Cap. Spend. - 3 Yr. Gr. Rate 2.7%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 89.1%
Total Debt to Equity 96.9%
Interest Coverage 7
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 7%
Return On Total Capital 9.1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.3%
Return On Equity 17.8%
Return On Equity - 3 Yr. Avg. 16.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 48%
Gross Margin - 3 Yr. Avg. 47.2%
EBITDA Margin 21%
EBITDA Margin - 3 Yr. Avg. 19.6%
Operating Margin 14.6%
Oper. Margin - 3 Yr. Avg. 13.3%
Pre-Tax Margin 12.5%
Pre-Tax Margin - 3 Yr. Avg. 11.4%
Net Profit Margin 9.4%
Net Profit Margin - 3 Yr. Avg. 8.4%
Effective Tax Rate 24.4%
Eff/ Tax Rate - 3 Yr. Avg. 25.1%
Payout Ratio 34.8%

ECL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ECL stock intrinsic value calculation we used $13153 million for the last fiscal year's total revenue generated by Ecolab. The default revenue input number comes from 2016 income statement of Ecolab. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ECL stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7%, whose default value for ECL is calculated based on our internal credit rating of Ecolab, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Ecolab.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ECL stock the variable cost ratio is equal to 88.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ECL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.1% for Ecolab.

Corporate tax rate of 27% is the nominal tax rate for Ecolab. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ECL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ECL are equal to 55.2%.

Life of production assets of 16.1 years is the average useful life of capital assets used in Ecolab operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ECL is equal to 11.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6901 million for Ecolab - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 290.091 million for Ecolab is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Ecolab at the current share price and the inputted number of shares is $37.5 billion.


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COMPANY NEWS

▶ Ecolab to Webcast Annual Meeting on May 4, 2017   [Apr-26-17 04:30PM  Business Wire]
▶ Multiple Stocks Reach 52-Week Highs   [Apr-18-17 04:42PM  GuruFocus.com]
▶ Ecolab sells former downtown St. Paul headquarters   [08:00AM  American City Business Journals]
▶ Ecolab Schedules Webcast and Conference Call on May 2   [Mar-29-17 05:35PM  Business Wire]
▶ Ecolab partners with Microsoft to enhance water-monitoring product   [Mar-22-17 04:34PM  at bizjournals.com]
▶ Ecolab partners with Microsoft to enhance water-monitoring product   [04:34PM  American City Business Journals]
▶ Ecolab Stock Trades Ex-Dividend Friday   [Mar-16-17 09:15AM  Investopedia]
▶ Ecolab Stock Trades Ex-Dividend Friday   [09:15AM  at Investopedia]
▶ 70 or Older? 3 Stocks You Should Consider Buying   [Mar-03-17 07:53AM  at Motley Fool]
▶ Ecolab Declares Regular Dividend   [Feb-23-17 06:27PM  Business Wire]
▶ Ecolab Closes on Purchase of Anios   [Feb-01-17 08:30AM  Business Wire]
▶ Ecolab Schedules Webcast and Conference Call on February 21   [Jan-17-17 04:30PM  Business Wire]
▶ How Ecolab Inc. (ECL) Stacks Up Against Its Peers   [Dec-09-16 09:31PM  at Insider Monkey]
▶ Ecolab Increases Cash Dividend 6 Percent   [04:30PM  Business Wire]
▶ 3 Stocks That Turned $7,000 Into $145,600 (or More)   [Nov-20-16 07:43AM  at Motley Fool]
▶ Dividend Aristocrats In Focus Part 11: Ecolab Inc. (ECL)   [Oct-21-16 01:37PM  at Insider Monkey]
▶ Ecolab Schedules Webcast and Conference Call on November 1   [Sep-27-16 04:30PM  Business Wire]
▶ Retired? 3 Stocks You Should Consider Buying   [Sep-21-16 10:32AM  at Motley Fool]
▶ Rule Breaker Investing: 5 Low-Risk Stocks   [Sep-18-16 10:44AM  at Motley Fool]
▶ How this stock fund routinely beats the S&P 500   [Aug-31-16 09:43AM  at MarketWatch]
Stock chart of ECL Financial statements of ECL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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