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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 encouraging segmental performance. However, intense competition remains a concern.
Shares of the Zacks Rank #3 (Hold) stock have gained 6.9% compared with the industry’s growth of 5.9% on a year-to-date basis. The S&P 500 Index has rallied 26.5% in the same time frame.
Ecolab — with a market capitalization of $66.32 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. The company has a trailing four-quarter earnings surprise of 2.3%, on average.
Key Catalysts
Ecolab boasts a robust product portfolio that continues to contribute to its long-term growth. In June, the company announced a new virtual visit offering for the life sciences industry to help address cleaning and disinfection challenges.
The company has 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, 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.
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With respect to segmental performance, Ecolab continued to register solid business recovery in the third quarter of 2021 as well, which resulted in robust performances by three of its four business segments. The Global Industrial segment’s fixed currency sales reflect 7.1% growth, while acquisition-adjusted fixed currency sales inched up 7% year over year. The improvement in the acquisition-adjusted fixed currency sales was driven by strong growth in Water and Paper (led by recovering market conditions and new business wins), robust improvement in Food & Beverage, and modest sales growth in Downstream.
The Global Institutional & Specialty arm’s fixed currency sales were up 17.7%, while acquisition-adjusted fixed currency sales advanced 17% year over year. The improvement in the Institutional division reflected recovering markets in the United States and Europe as the number of Ecolab accounts and solutions per account neared pre-COVID-19 levels. This was driven by new business wins, including gains from Ecolab Science Certified programs, innovation, and pricing. Specialty sales increased modestly on the back of strong quickservice sales.
Factor Hurting the Stock
Ecolab operates in highly competitive markets, which have numerous global, national, regional, and local players. The company’s ability to compete depends, in part, on providing high quality and high value-added products, technology and service. However, there is no assurance that the company will be able to accomplish its technology development goals or that technological developments by its competitors will not place any of its products, technology or services at a competitive disadvantage in the future.
Estimates Trend
For 2021, the Zacks Consensus Estimate for revenues is pegged at $12.63 billion, indicating growth of 2.3% from the year-ago reported figure. The same for adjusted earnings per share stands at $4.84, suggesting an improvement of 20.4% from the prior-year reported figure.
Stocks to Consider
Some better-ranked stocks in the broader medical space include Thermo Fisher Scientific Inc. (TMO - Free Report) , McKesson Corporation (MCK - Free Report) and NextGen Healthcare, Inc. .
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
McKesson beat earnings estimates in each of the trailing four quarters, the average surprise being 19.9%. The company currently carries a Zacks Rank #2.
McKesson’s long-term earnings growth rate is estimated at 8.9%. The company’s earnings yield of 9.9% compares favorably with the industry’s 3.2%.
NextGen Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 16%. The company currently carries a Zacks Rank of 2.
NextGen Healthcare’s long-term earnings growth rate is estimated at 8.5%. The company’s earnings yield of 5.9% compares favorably with the industry’s (4.1%).
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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 encouraging segmental performance. However, intense competition remains a concern.
Shares of the Zacks Rank #3 (Hold) stock have gained 6.9% compared with the industry’s growth of 5.9% on a year-to-date basis. The S&P 500 Index has rallied 26.5% in the same time frame.
Ecolab — with a market capitalization of $66.32 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. The company has a trailing four-quarter earnings surprise of 2.3%, on average.
Key Catalysts
Ecolab boasts a robust product portfolio that continues to contribute to its long-term growth. In June, the company announced a new virtual visit offering for the life sciences industry to help address cleaning and disinfection challenges.
The company has 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, 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.
With respect to segmental performance, Ecolab continued to register solid business recovery in the third quarter of 2021 as well, which resulted in robust performances by three of its four business segments. The Global Industrial segment’s fixed currency sales reflect 7.1% growth, while acquisition-adjusted fixed currency sales inched up 7% year over year. The improvement in the acquisition-adjusted fixed currency sales was driven by strong growth in Water and Paper (led by recovering market conditions and new business wins), robust improvement in Food & Beverage, and modest sales growth in Downstream.
The Global Institutional & Specialty arm’s fixed currency sales were up 17.7%, while acquisition-adjusted fixed currency sales advanced 17% year over year. The improvement in the Institutional division reflected recovering markets in the United States and Europe as the number of Ecolab accounts and solutions per account neared pre-COVID-19 levels. This was driven by new business wins, including gains from Ecolab Science Certified programs, innovation, and pricing. Specialty sales increased modestly on the back of strong quickservice sales.
Factor Hurting the Stock
Ecolab operates in highly competitive markets, which have numerous global, national, regional, and local players. The company’s ability to compete depends, in part, on providing high quality and high value-added products, technology and service. However, there is no assurance that the company will be able to accomplish its technology development goals or that technological developments by its competitors will not place any of its products, technology or services at a competitive disadvantage in the future.
Estimates Trend
For 2021, the Zacks Consensus Estimate for revenues is pegged at $12.63 billion, indicating growth of 2.3% from the year-ago reported figure. The same for adjusted earnings per share stands at $4.84, suggesting an improvement of 20.4% from the prior-year reported figure.
Stocks to Consider
Some better-ranked stocks in the broader medical space include Thermo Fisher Scientific Inc. (TMO - Free Report) , McKesson Corporation (MCK - Free Report) and NextGen Healthcare, Inc. .
Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
McKesson beat earnings estimates in each of the trailing four quarters, the average surprise being 19.9%. The company currently carries a Zacks Rank #2.
McKesson’s long-term earnings growth rate is estimated at 8.9%. The company’s earnings yield of 9.9% compares favorably with the industry’s 3.2%.
NextGen Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 16%. The company currently carries a Zacks Rank of 2.
NextGen Healthcare’s long-term earnings growth rate is estimated at 8.5%. The company’s earnings yield of 5.9% compares favorably with the industry’s (4.1%).