Back to top

Analyst Blog

Leading cleaning and sanitation products maker Ecolab (ECL - Analyst Report) rolled out its latest Kay Super Contact Cleaner for the quick service restaurant (QSR) chains. This first-of-its-kind cleaner has the unique feature of clinging on to angled surfaces for quick and efficient cleaning of kitchen soils, including carbonized grease.

Kay is the leading supplier of chemical cleaning and sanitizing products to the QSR industry and the food retail segment in the global market. Its offerings are customized to meet the needs of the market segments it serves, and are designed to provide highly effective cleaning performance, promote food safety, reduce labor costs, and enhance user and guest safety.

While Kay’s customer base has grown over the years, the business remains largely dependent upon a limited number of major QSR chains and franchisees, as well as large food retail customers.

With a background of robust growth, Ecolab is poised to gain momentum via its aggressive strategy of rolling out new products. Earlier, the Kay business had launched the Kay Heated Soak Tank Program for QSRs. Recently, the company also launched the Advantis FC Cleaning Program, a high-foaming, chlorinated alkaline cleaner for reduced temperature foam-cleaning in food and protein processing.

Although we are impressed by Ecolab’s strong international exposure and expansion into high-growth markets, we remain cautious about its strong competition. Challenging economic conditions in 2013 and unfavorable internal issues are likely to act as near-term headwinds for the company. Furthermore, raw material price inflation remains a cause of concern.

ECL has a Zacks Rank #3 (Hold). While we remain on the sidelines regarding Ecolab, companies from the specialty chemicals sector such as Ferro Corporation (FOE - Snapshot Report), with a Zacks Rank #1 (Strong Buy), and Minerals Technologies Inc. (MTX - Snapshot Report) and Sensient Technologies Corp. (SXT - Snapshot Report), both with a Zacks Rank #2 (Buy), are expected to do well.

Please login to Zacks.com or register to post a comment.