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Here's Why You Should Retain Ecolab (ECL) Stock Right Now
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Ecolab Inc. (ECL - Free Report) is well-poised for growth, backed by a robust product portfolio and cost-efficiency program. However, segmental weakness remains a concern.
The stock has gained 6.8% against the industry’s decline of 6.7% in a year’s time. Also, the S&P 500 Index has rallied 42.5% in the same time frame.
Ecolab — with a market capitalization of $61.26 billion — is a leading provider of water, hygiene, and energy technologies and services, which protect people and vital resources. It anticipates earnings growth of 10.9% for the next five years.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
Factor Hurting the Stock
Segmental softness remains concerning for Ecolab. In first-quarter 2021, Ecolab’s Global Industrial sales fell 2.1% year over year to $1.43 billion. A substantial decrease in Downstream sales and a decline in Food & Beverage more than offset modest sales growth in Paper and sustained Water sales.
Further, sales at the Global Institutional & Specialty segment slumped 21% year over year to $858.5 million due to a slight decline in the Institutional business and Specialty sales on account of the adverse impact of the ongoing COVID-19 second wave. With respect to the Other segment, sales dipped 2.9% year over year to $271.3 million.
Key Catalysts
Ecolab boasts a robust product portfolio that continues to contribute to its long-term growth. In March, the company launched an improved version of its Smart Water Navigator. The free online tool is equipped to help businesses understand the value of water in their operations and take necessary action to attain corporate water goals.
The company has been gaining traction in digital technology markets also. It expects huge investments in the coming quarters to enhance its digital portfolio.
In fact, in May 2021, the company introduced Water Flow Intelligence, which is a digital service helping industries with real-time visibility of water utilization at the enterprise, site and asset levels. This digital solution will aid companies facing water scarcity.
Moreover, in March 2021, the company launched a new on-demand digital training solution to its industry-leading Operating Room (OR) Program. The new OR program, known as Ecolab OR Program Reinforced, is an all-inclusive solution that now comprises a digital training element to help hospitals bolster the quality and consistency of cleanliness for this critical care space.
In the third quarter of 2020, Ecolab announced the expansion of the Ecolab Efficiency Initiative, which will generate $335 million of projected savings (up from the previously mentioned $270 million) by the end of 2022.
Additionally, in order to acknowledge evolving end markets in the Institutional business line and boost its capability in capturing market share, the company granted the Institutional Advancement program (the Institutional program) in fourth-quarter 2020. The program is focused on advancement of improvements made throughout the past 18 months and is committed toward continued improvement of its sales and service model, while maintaining its focus on growth and excellent customer experience.
On the back of the combined effect of these two programs, Ecolab anticipates incurring costs of $335 million ($255 million after tax) through the end of 2023, with cumulative cost savings from the two programs projected to generate annual savings of $365 million by the end of 2024.
Estimates Trend
For 2021, the Zacks Consensus Estimate for revenues is pegged at $12.41 billion, indicating growth of 0.5% from the year-ago reported figure. The same for adjusted earnings per share stands at $5.06, suggesting an improvement of 25.9% from the prior-year reported figure.
HCA Healthcare’s long-term earnings growth rate is expected at 12.3%.
DaVita’s long-term earnings growth rate is estimated at 14.4%.
Amedisys’ long-term earnings growth rate is estimated at 12%.
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Here's Why You Should Retain Ecolab (ECL) Stock Right Now
Ecolab Inc. (ECL - Free Report) is well-poised for growth, backed by a robust product portfolio and cost-efficiency program. However, segmental weakness remains a concern.
The stock has gained 6.8% against the industry’s decline of 6.7% in a year’s time. Also, the S&P 500 Index has rallied 42.5% in the same time frame.
Ecolab — with a market capitalization of $61.26 billion — is a leading provider of water, hygiene, and energy technologies and services, which protect people and vital resources. It anticipates earnings growth of 10.9% for the next five years.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
Factor Hurting the Stock
Segmental softness remains concerning for Ecolab. In first-quarter 2021, Ecolab’s Global Industrial sales fell 2.1% year over year to $1.43 billion. A substantial decrease in Downstream sales and a decline in Food & Beverage more than offset modest sales growth in Paper and sustained Water sales.
Further, sales at the Global Institutional & Specialty segment slumped 21% year over year to $858.5 million due to a slight decline in the Institutional business and Specialty sales on account of the adverse impact of the ongoing COVID-19 second wave. With respect to the Other segment, sales dipped 2.9% year over year to $271.3 million.
Key Catalysts
Ecolab boasts a robust product portfolio that continues to contribute to its long-term growth. In March, the company launched an improved version of its Smart Water Navigator. The free online tool is equipped to help businesses understand the value of water in their operations and take necessary action to attain corporate water goals.
The company has been gaining traction in digital technology markets also. It expects huge investments in the coming quarters to enhance its digital portfolio.
In fact, in May 2021, the company introduced Water Flow Intelligence, which is a digital service helping industries with real-time visibility of water utilization at the enterprise, site and asset levels. This digital solution will aid companies facing water scarcity.
Moreover, in March 2021, the company launched a new on-demand digital training solution to its industry-leading Operating Room (OR) Program. The new OR program, known as Ecolab OR Program Reinforced, is an all-inclusive solution that now comprises a digital training element to help hospitals bolster the quality and consistency of cleanliness for this critical care space.
In the third quarter of 2020, Ecolab announced the expansion of the Ecolab Efficiency Initiative, which will generate $335 million of projected savings (up from the previously mentioned $270 million) by the end of 2022.
Additionally, in order to acknowledge evolving end markets in the Institutional business line and boost its capability in capturing market share, the company granted the Institutional Advancement program (the Institutional program) in fourth-quarter 2020. The program is focused on advancement of improvements made throughout the past 18 months and is committed toward continued improvement of its sales and service model, while maintaining its focus on growth and excellent customer experience.
On the back of the combined effect of these two programs, Ecolab anticipates incurring costs of $335 million ($255 million after tax) through the end of 2023, with cumulative cost savings from the two programs projected to generate annual savings of $365 million by the end of 2024.
Estimates Trend
For 2021, the Zacks Consensus Estimate for revenues is pegged at $12.41 billion, indicating growth of 0.5% from the year-ago reported figure. The same for adjusted earnings per share stands at $5.06, suggesting an improvement of 25.9% from the prior-year reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space are HCA Healthcare, Inc. (HCA - Free Report) , DaVita Inc. (DVA - Free Report) and Amedisys, Inc. (AMED - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HCA Healthcare’s long-term earnings growth rate is expected at 12.3%.
DaVita’s long-term earnings growth rate is estimated at 14.4%.
Amedisys’ long-term earnings growth rate is estimated at 12%.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>