ECL – Market expectations are for record-high Uniform ROA, but management’s concerns about EPS growth, revenue growth, and their Asia Pacific performance imply this may be unwarranted

• Ecolab Inc. (ECL:USA) currently trades near recent highs relative to UAFRS-based (Uniform) Earnings, with a 24.6x Uniform P/E, implying fairly bullish expectations for the firm. However, given management’s concerns about growth and international performance, this may be unwarranted
• Specifically, management appears concerned about the sustainability of revenue growth in Europe and diluted EPS growth. They may also lack confidence in their ability to improve their Asia Pacific performance going forward. Should the firm fail to drive Uniform Margins to record-highs, as management sentiment suggests, multiple compression and equity downside would be warranted