Should Investors Be Scooping Up the Ecolab Stock Dip?

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Ecolab just held it annual stockholder meeting

Ecolab Inc. (NYSE:ECL) is down 1.6% to trade at $164.04 at last check, likely due to some broader market headwinds. In other news, the water treatment name revealed at this week’s annual stockholder meeting that the slate of 12 director nominees named in the company’s proxy statement was elected for a one-year term ending at the next meeting in May 2023.

Though it has been anything but smooth sailing for Ecolab stock, the $160 level seems to have captured today’s pullback, keeping the security away from its March 8, two-year low $154.98. Longer term, however, Ecolab stock carries a 28.3% year-over-year deficit.

The options pits are firmly bearish on ECL. This is per the security’s 10-day put/call volume ratio of 3.73 at the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 96% of readings from the last 12 months. This means there has been a penchant for bearish bets lately. 

Ecolab is estimated to grow revenues by 12.1%, and earnings by 11.1% for 2022, and is also expected to increase revenues by another 5.1%, and earnings by 17.5% for 2023. Plus, the company has a dividend yield of 1.17%, with a forward dividend of $2.04.

However, Ecolab stock trades rich at a forward price-earnings ratio of 33.33, and a price-sales ratio of 3.83. The water treatment name also offers no long-term stability in its balance sheet, given it holds $9.1 billion in total debt. In other words, this makes the stock too large of a risk for fundamental-based investors.