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Ecolab Inc.

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Over the last three months Ecolab has underperformed the broader industry trends in terms of price movements. Additionally, an unfavorable estimate revision trend indicates looming concerns ahead of the stock. Ecolab reported mixed results in the third quarter of 2016 with adjusted earnings higher than the Zacks Consensus Estimate. However, net sales lagged the estimate mark. Ecolab faces pricing pressure in the Energy segment which is likely to hurt profits. Nevertheless, we believe that a robust product portfolio and an expanding customer base will drive organic sales. In fact, the realization of targeted synergies associated with acquisitions should also pave way for margin expansion. However, a volatile exchange rate, cut-throat competition in the niche markets and integration risks are likely to hamper the company's growth in the near term.


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