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Why Is Ecolab (ECL) Up 0.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Ecolab (ECL - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ecolab due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Ecolab Q4 Earnings In Line With Estimates, Revenues Lag
Ecolab Inc. reported fourth-quarter 2020 adjusted earnings per share of $1.23, which were in line with the Zacks Consensus Estimate. However, the bottom line declined 15.2% on a year-over-year basis.
The year-over-year decline in the bottom line was due to COVID-associated volume declines, unfavorable business mix and investments in the business, which more than offset favorable pricing, lower variable compensation and cost-saving initiatives.
For 2020, the company reported adjusted EPS of $4.02, down 21.5% from that reported in 2019. The figure also missed the consensus mark by 0.2%.
Revenue Details
This Zacks Rank #2 (Buy) company’s quarterly net sales were 3.07 billion, down 5.5% from the year-ago figure. Also, the top line missed the Zacks Consensus Estimate by 1%.
For 2020, the company reported net sales of $11.79 billion, down 6% from the previous year. The figure also missed the consensus mark by 0.9%.
Segmental Analysis
With effect from the first quarter of 2020, the company has made modifications to the way it reports through its segments, as discussed below.
Global Industrial
Sales at the segment fell 1.9% year over year to $1.55 billion. Substantial decrease in Downstream sales and a decline in Water more than offset modest sales growth in Food & Beverage and Paper.
Global Institutional & Specialty
Sales plunged 21.9% year over year to $881.4 million owing to a steep decline in the Institutional business and a modest decrease in Specialty sales.
Global Healthcare and Life Sciences
Sales at the segment improved 23% year over year to $314.1 million, courtesy of higher sales owing to the coronavirus-related demand in both the Healthcare and Life Sciences business lines.
Other
Sales declined 8.1% year over year to $282.9 million.
Margin Analysis
Ecolab reported adjusted gross profit of $1.29 billion, down 12.6% year over year. As a percentage of revenues, adjusted gross margin in the fourth quarter was 42%, down 270 basis points (bps).
Adjusted operating income in the quarter was $479.1 million, down 16% year over year. Adjusted operating margin in the quarter was 15.6%, which contracted 180 bps year over year.
Guidance
The company has not issued either quarterly or 2021 outlook due to the continued uncertainty surrounding the COVID-19 pandemic and the full scope of its impact on the global economy and duration of the same.
Full-year 2021 sales at the Healthcare & Life Sciences segment are anticipated to exhibit moderate improvement compared with the previous year’s solid growth. Both Industrial segment business and Institutional and Other segment sales are projected to show substantial growth on a year-over-year basis in 2021.
Per management, the pandemic will continue to remain a key economic factor throughout 2021, especially in the early part of the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -15.31% due to these changes.
VGM Scores
At this time, Ecolab has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ecolab has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Ecolab (ECL) Up 0.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Ecolab (ECL - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ecolab due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Ecolab Q4 Earnings In Line With Estimates, Revenues Lag
Ecolab Inc. reported fourth-quarter 2020 adjusted earnings per share of $1.23, which were in line with the Zacks Consensus Estimate. However, the bottom line declined 15.2% on a year-over-year basis.
The year-over-year decline in the bottom line was due to COVID-associated volume declines, unfavorable business mix and investments in the business, which more than offset favorable pricing, lower variable compensation and cost-saving initiatives.
For 2020, the company reported adjusted EPS of $4.02, down 21.5% from that reported in 2019. The figure also missed the consensus mark by 0.2%.
Revenue Details
This Zacks Rank #2 (Buy) company’s quarterly net sales were 3.07 billion, down 5.5% from the year-ago figure. Also, the top line missed the Zacks Consensus Estimate by 1%.
For 2020, the company reported net sales of $11.79 billion, down 6% from the previous year. The figure also missed the consensus mark by 0.9%.
Segmental Analysis
With effect from the first quarter of 2020, the company has made modifications to the way it reports through its segments, as discussed below.
Global Industrial
Sales at the segment fell 1.9% year over year to $1.55 billion. Substantial decrease in Downstream sales and a decline in Water more than offset modest sales growth in Food & Beverage and Paper.
Global Institutional & Specialty
Sales plunged 21.9% year over year to $881.4 million owing to a steep decline in the Institutional business and a modest decrease in Specialty sales.
Global Healthcare and Life Sciences
Sales at the segment improved 23% year over year to $314.1 million, courtesy of higher sales owing to the coronavirus-related demand in both the Healthcare and Life Sciences business lines.
Other
Sales declined 8.1% year over year to $282.9 million.
Margin Analysis
Ecolab reported adjusted gross profit of $1.29 billion, down 12.6% year over year. As a percentage of revenues, adjusted gross margin in the fourth quarter was 42%, down 270 basis points (bps).
Adjusted operating income in the quarter was $479.1 million, down 16% year over year. Adjusted operating margin in the quarter was 15.6%, which contracted 180 bps year over year.
Guidance
The company has not issued either quarterly or 2021 outlook due to the continued uncertainty surrounding the COVID-19 pandemic and the full scope of its impact on the global economy and duration of the same.
Full-year 2021 sales at the Healthcare & Life Sciences segment are anticipated to exhibit moderate improvement compared with the previous year’s solid growth. Both Industrial segment business and Institutional and Other segment sales are projected to show substantial growth on a year-over-year basis in 2021.
Per management, the pandemic will continue to remain a key economic factor throughout 2021, especially in the early part of the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -15.31% due to these changes.
VGM Scores
At this time, Ecolab has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ecolab has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.