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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 4.6% against the industry’s decline of 14.7% in a year’s time. Meanwhile, the S&P 500 Index has rallied 40.4% in the same time frame.
Ecolab — with a market capitalization of $59.54 billion — is a leading provider of water, hygiene, and energy technologies and services, which protect people and vital resources. It anticipates earnings growth of 12.7% for the next five years.
Image Source: Zacks Investment Research
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 a concern for Ecolab. In first-quarter 2021, the company’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 also been gaining traction in digital technology markets. 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 includes 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 focus on growth and enhanced 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 $12.44 billion, indicating growth of 0.7% from the year-ago reported figure. The same for adjusted earnings per share stands at $5.07, suggesting an improvement of 26.1% from the prior-year reported figure.
Veeva Systems’ long-term earnings growth rate is estimated at 15.8%.
DaVita’s long-term earnings growth rate is estimated at 14.4%.
Baxter International’s long-term earnings growth rate is projected at 9.3%.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Image: Bigstock
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 4.6% against the industry’s decline of 14.7% in a year’s time. Meanwhile, the S&P 500 Index has rallied 40.4% in the same time frame.
Ecolab — with a market capitalization of $59.54 billion — is a leading provider of water, hygiene, and energy technologies and services, which protect people and vital resources. It anticipates earnings growth of 12.7% 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 a concern for Ecolab. In first-quarter 2021, the company’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 also been gaining traction in digital technology markets. 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 includes 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 focus on growth and enhanced 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 $12.44 billion, indicating growth of 0.7% from the year-ago reported figure. The same for adjusted earnings per share stands at $5.07, suggesting an improvement of 26.1% from the prior-year reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Veeva Systems Inc. (VEEV - Free Report) , DaVita Inc. (DVA - Free Report) and Baxter International Inc. (BAX - 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.
Veeva Systems’ long-term earnings growth rate is estimated at 15.8%.
DaVita’s long-term earnings growth rate is estimated at 14.4%.
Baxter International’s long-term earnings growth rate is projected at 9.3%.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>