Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Debt
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Profitability Ratios (Summary)
Ecolab Inc., profitability ratios
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 financial data reveals several important trends regarding profitability and efficiency over the analyzed period.
- Gross profit margin
- The gross profit margin shows a gradual decline from 46.49% in 2017 to 40.19% in 2021. The most significant decrease occurs between 2017 and 2018, followed by relatively stable but slightly decreasing margins through 2019 to 2021. This indicates a reduction in the basic profitability of the company’s core operations, potentially due to increased costs or pricing pressures.
- Operating profit margin
- The operating profit margin follows a similar downward trend, decreasing from 14.6% in 2017 to 12.55% in 2021. Notably, there is a dip in 2020 to 11.84%, possibly reflecting operational challenges during that year, but a modest recovery occurs in 2021. Overall, margins have narrowed, suggesting increased operating expenses relative to revenue.
- Net profit margin
- The net profit margin exhibits more volatility. It declines from 10.9% in 2017 to 9.74% and 10.46% in subsequent years, then sharply moves into negative territory in 2020 at -10.22%, before rebounding to 8.87% in 2021. This negative margin in 2020 indicates a loss, likely caused by extraordinary expenses or reduced income, followed by a recovery that does not fully return to previous peak levels.
- Return on equity (ROE)
- Return on equity decreases from 19.8% in 2017 to 17.86% and 17.95% in the following two years, then plunges to -19.54% in 2020, mirroring the net profit margin decline. The ROE recovers to 15.64% in 2021, although it remains below the initial values. This pattern suggests that shareholder returns were significantly impacted by adverse events in 2020, with partial recovery in the most recent year.
- Return on assets (ROA)
- Return on assets declines slightly from 7.56% in 2017 to 7.12% in 2018, then rises to 7.47% in 2019 before dropping steeply to -6.65% in 2020. It recovers to 5.33% in 2021, but still lags behind earlier years. The ROA trend indicates diminished efficiency in asset utilization during 2020, with some improvement subsequently.
Overall, the data from 2017 to 2021 demonstrate a downward trend in profitability margins and returns, with a significant negative impact observed in 2020. Despite partial rebounds in 2021, profitability and return metrics have not fully returned to the levels seen at the beginning of the period. This suggests challenges, potentially related to external economic conditions or company-specific issues, which affected financial performance most severely in 2020.
Return on Sales
Return on Investment
Gross Profit Margin
Ecolab Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a fluctuating trend over the analyzed period. Starting at 13,838,300 thousand US dollars in 2017, the figure increased steadily, peaking at 14,906,300 thousand US dollars in 2019. However, a significant decline was observed in 2020, dropping to 11,790,200 thousand US dollars, followed by a partial recovery in 2021 to 12,733,100 thousand US dollars.
- Gross Profit
- Gross profit followed a somewhat similar pattern to net sales but showed more pronounced decline. Beginning at 6,433,200 thousand US dollars in 2017, gross profit decreased to 6,042,300 thousand US dollars in 2018, then slightly increased to 6,182,900 thousand US dollars in 2019. A substantial drop occurred in 2020, bringing gross profit down to 4,884,400 thousand US dollars, with a modest recovery to 5,117,300 thousand US dollars in 2021.
- Gross Profit Margin
- The gross profit margin exhibited a downward trend across the period. From 46.49% in 2017, it declined sharply to 41.19% in 2018, and maintained a similar level around 41.48% in 2019 and 41.43% in 2020. It further decreased to 40.19% in 2021, indicating a gradual erosion of profitability relative to sales.
- Overall Analysis
- Both net sales and gross profit experienced growth until 2019 before facing considerable declines in 2020, likely reflective of external or market conditions impacting the business. Although some recovery was evident in 2021, the figures remained below peak levels. Concurrently, the gross profit margin steadily decreased over the five-year span, suggesting rising cost pressures or changes in sales mix affecting profitability. The combination of declining margins and fluctuating sales points to challenges in maintaining profitability levels during the latter years.
Operating Profit Margin
Ecolab Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| Operating Profit Margin, Sector | ||||||
| Chemicals | ||||||
| Operating Profit Margin, Industry | ||||||
| Materials | ||||||
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 2021 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Sales
- The net sales demonstrated a general upward trend from 2017 to 2019, increasing from approximately 13.8 billion to nearly 15 billion US dollars. However, there was a significant decline in 2020, with net sales dropping to about 11.8 billion US dollars. In 2021, net sales partially recovered to approximately 12.7 billion US dollars but remained below pre-2020 levels.
- Operating Income
- Operating income followed a similar pattern to net sales. It was relatively stable from 2017 to 2019, ranging from approximately 1.95 billion to just over 2 billion US dollars. In 2020, operating income fell markedly to about 1.4 billion US dollars, followed by a moderate recovery in 2021 to nearly 1.6 billion US dollars, though still below earlier years.
- Operating Profit Margin
- The operating profit margin decreased from 14.6% in 2017 to 13.27% in 2018, then showed a slight recovery in 2019 to 13.51%. In 2020, the margin declined further to 11.84%, reflecting the impacts on profitability during that year. There was a modest improvement to 12.55% in 2021, indicating a partial restoration of operating efficiency, although the margin did not return to the levels seen prior to 2020.
- Overall Analysis
- The data reveals that both net sales and operating income experienced growth through 2019, followed by a pronounced downturn in 2020. This decline coincides with a notable decrease in operating profit margin, suggesting that not only sales volume but also operational efficiency were adversely affected. The subsequent partial recovery in 2021 indicates efforts to regain sales and improve profitability, but the figures remain below the pre-2020 benchmarks. These patterns could reflect external challenges impacting the company’s financial performance during 2020 and a gradual adaptation or recovery in the following year.
Net Profit Margin
Ecolab Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) attributable to Ecolab | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| Net Profit Margin, Sector | ||||||
| Chemicals | ||||||
| Net Profit Margin, Industry | ||||||
| Materials | ||||||
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 2021 Calculation
Net profit margin = 100 × Net income (loss) attributable to Ecolab ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Ecolab
- The net income shows a generally positive trend from 2017 to 2019, increasing from approximately 1.51 billion to 1.56 billion US dollars. However, in 2020, there is a significant downturn resulting in a net loss of about 1.21 billion US dollars. This negative performance reverses in 2021, with net income recovering to approximately 1.13 billion US dollars, although this is still below the peak levels of 2019.
- Net Sales
- Net sales experienced growth from 2017 through 2019, rising from around 13.84 billion to nearly 14.91 billion US dollars. In 2020, net sales decreased notably to approximately 11.79 billion US dollars, reflecting a decline likely influenced by external factors impacting the market or operations. The figures partially recover in 2021, increasing to about 12.73 billion US dollars, yet remaining below the previous highs observed in 2018 and 2019.
- Net Profit Margin
- The net profit margin follows a pattern consistent with net income, beginning at 10.9% in 2017 and slightly declining to 9.74% in 2018. There is a minor improvement in 2019 to 10.46%. In 2020, the margin plunges to -10.22%, indicating a substantial loss relative to sales. By 2021, the margin recovers to 8.87%, suggesting a return to profitability, though the margin remains below the levels recorded before 2020.
Return on Equity (ROE)
Ecolab Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) attributable to Ecolab | ||||||
| Total Ecolab shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| ROE, Sector | ||||||
| Chemicals | ||||||
| ROE, Industry | ||||||
| Materials | ||||||
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 2021 Calculation
ROE = 100 × Net income (loss) attributable to Ecolab ÷ Total Ecolab shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends in key profitability and equity metrics over the five-year period ending in 2021.
- Net income (loss) attributable to the company
- Net income demonstrated relative stability and growth from 2017 to 2019, increasing from approximately 1.51 billion USD to around 1.56 billion USD. However, there was a significant reversal in 2020, with net income turning into a loss of approximately 1.21 billion USD. This negative result was followed by a recovery in 2021, with net income returning to positive territory at roughly 1.13 billion USD, although still below the peak levels observed prior to 2020.
- Total shareholders’ equity
- Shareholders’ equity showed an upward trend from 2017 through 2019, rising steadily from approximately 7.62 billion USD to 8.69 billion USD. This was followed by a sharp decline in 2020 to about 6.17 billion USD, reflecting potential impacts from the net loss or other equity adjustments. In 2021, shareholders’ equity improved again, reaching around 7.22 billion USD but remained below pre-2020 levels.
- Return on equity (ROE)
- The return on equity metric aligns closely with the net income trend. ROE was strong and relatively stable from 2017 to 2019, ranging from approximately 17.86% to 19.8%. In 2020, ROE became negative at about -19.54%, reflecting the net loss incurred during that year. Although ROE rebounded to 15.64% in 2021, it did not fully recover to the earlier strong profitability levels.
Overall, the data indicates a period of consistent profitability and equity growth through 2019, followed by a pronounced financial disruption in 2020, likely driven by extraordinary or external factors. The subsequent year shows signs of recovery but with metrics not fully restored to previous highs. This pattern suggests that the company faced significant challenges in 2020 but took steps toward financial stabilization and improvement in 2021.
Return on Assets (ROA)
Ecolab Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) attributable to Ecolab | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| ROA, Sector | ||||||
| Chemicals | ||||||
| ROA, Industry | ||||||
| Materials | ||||||
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 2021 Calculation
ROA = 100 × Net income (loss) attributable to Ecolab ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Ecolab
- The net income showed a generally positive trend from 2017 to 2019, increasing from 1,508,400 thousand USD in 2017 to 1,558,900 thousand USD in 2019. However, there was a significant decline in 2020, with a net loss of 1,205,100 thousand USD. The company returned to profitability in 2021, posting a net income of 1,129,900 thousand USD, though this figure remained below the levels seen in 2017-2019.
- Total Assets
- Total assets remained relatively stable from 2017 through 2019, increasing moderately from approximately 19.96 billion USD to 20.87 billion USD. In 2020, total assets decreased to 18.13 billion USD, reflecting a contraction possibly linked to the adverse conditions in that year. This was followed by a significant rebound in 2021, with total assets rising sharply to 21.21 billion USD, surpassing previous years.
- Return on Assets (ROA)
- The ROA followed a pattern consistent with net income trends. From 2017 to 2019, ROA hovered in a narrow range between 7.12% and 7.56%, indicating steady asset profitability. In 2020, ROA turned negative to -6.65%, corresponding with the net loss and reduction in assets, highlighting operational challenges. The following year, ROA improved to 5.33%, indicating a recovery in efficiency though still below pre-2020 performance levels.