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Analyst Blog

Ecolab Inc. (ECL - Analyst Report), a leading manufacturer of cleaning and sanitation products, rolled out its latest institutional food safety product, Antimicrobial Fruit and Vegetable Treatment (AFVT). 

The AFVT is registered with the Environmental Protection Agency (EPA) as an antimicrobial product. The Food and Drug Administration (FDA) has also cleared it to remove germs in raw as well as further processed fruits and vegetables. 
 
According to a U.S. Centers for Disease Control and Prevention (CDC) study, consumption of contaminated leafy vegetables, particularly lettuce, affects the health of about 2.2 million people. This corresponds to about 23% of the 9.6 million people who suffer from food borne illnesses every year. 
 
Ecolab’s management asserts that the new AFVT product works in just 90 seconds with no rinse required. The easy-to-use, low cost product can effectively remove pathogens in large food establishments, thereby enhancing institutional food safety and cleanliness. However, it may not be used in commercial food processing facilities or for produce available at grocery stores.
 
St. Paul, Minn.-based Ecolab serves the foodservice, food and beverage processing, healthcare and hospitality markets in the U.S. and abroad. We are encouraged by the company’s consistent performance of delivering double-digit earnings growth despite the challenging business environment. Ecolab remains focused on bringing new technologies into the market. Moreover, the company is aggressively pursuing acquisitions to expand into emerging markets for growth.
 
Although we are impressed by Ecolab’s strong international exposure, we remain cautious about aggressive competition. Challenging economic and market trends in 2013 together with unfavorable internal issues will likely be near-term headwinds for the company. Raw material price inflation also remains a cause of concern.
 
Ecolab currently has a Zacks Rank #3 (Hold). Other chemical-specialty companies such as American Pacific Corporation , American Vanguard Corp. (AVD - Snapshot Report) and Minerals Technologies Inc. (MTX - Snapshot Report) warrant a look. APFC and AVD carry a Zacks Rank #1 (Strong Buy), while MTX carries a Zacks Rank #2 (Buy).

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