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In the last reported quarter, the company’s earnings per share (EPS) of 88 cents surpassed the Zacks Consensus Estimate by 2.3%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on three occasions and missed once, delivering an earnings surprise of 0.9%, on average.
Let’s see how things have shaped up for Ecolab prior to this announcement.
Global Industrial
The Global Industrial segment, comprising the Water, Food & Beverage, Paper and Downstream units, witnessed a sales uptick in the first quarter of 2023. Per the company’s first-quarter earnings call in May, the water business has been performing well for the past few months. Per management, volume has been positive as it has been helping its customers to produce better and more products, while reducing their water usage. With a reduction in water usage, customers can reduce their energy usage, carbon footprint and, in turn, their costs. This will likely make them invest in Ecolab. This is likely to have significantly boosted the company’s second-quarter revenues.
We estimate the second-quarter Global Industrial segment revenues to be $1.86 billion, suggesting an uptick of 9.1% from the year-ago quarter’s reported figure.
Ecolab’s Global Institutional & Specialty segment recorded strong growth in the last reported quarter, courtesy of the company’s performance in the Institutional and Specialty divisions. The Institutional division reflected strong pricing and new business wins. Specialty sales showed robust growth on the back of strong quickservice sales growth.
On first-quarter 2023 earnings call, Ecolab’s management confirmed that the repositioning of the Institutional business has been progressing well, as demonstrated by strong sales growth and margin leverage within the segment.
Per management, people order online and use takeout much more than before, translating to lower dine-in traffic. However, on the same call, Ecolab confirmed that the restaurant operators have been selling the same or more at a lower service cost as they have fewer people staying in the dining room. Despite this decline in foot traffic in restaurants, the company has gained market share. Per management, its teams have managed to drive share, pricing and innovation to ensure Ecolab’s continued strength in the segment. This raises our optimism about the company’s second-quarter revenue performance.
We estimate the second-quarter Global Institutional & Specialty segment revenues to be $1.21 billion, suggesting an improvement of 6.4% from the year-ago quarter’s reported figure.
Other Factors at Work
Rising demand for Pest Elimination (a component of Ecolab’s broader Other segment) in commercial businesses is likely to have driven the segment’s revenues in the to-be-reported quarter. Ecolab has also started to provide disinfection services for its customers, which is also likely to have driven quarterly revenues.
However, management sounded cautious regarding higher interest rates and foreign exchange fluctuations, which are expected to have softened global demand. Management’s anticipation about inflation to remain high and continued geopolitical tensions is likely to have weighed on the company’s second-quarter performance. Also, continued higher energy surcharges impacting demand and global energy costs are likely to have weighed on the second-quarter segmental revenues.
The Estimate Picture
For second-quarter 2023, the Zacks Consensus Estimate of $3.87 billion for total revenues implies an improvement of 7.9% from the prior-year quarter’s reported figure.
The consensus estimate for EPS is pegged at $1.21, implying an improvement of 10% from the prior-year period’s reported number.
What Our Model Suggests
Our proven model predicts an earnings beat for Ecolab this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Ecolab has an Earnings ESP of +0.50%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Other Stocks Worth a Look
Here are a few other medical stocks worth considering, as these also have the right combination of elements to beat on earnings this reporting cycle.
AmerisourceBergen’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 3.1%.
McKesson Corporation (MCK - Free Report) has an Earnings ESP of +1.93% and is a Zacks #2 Rank stock. MCK has an estimated long-term growth rate of 10.9%.
McKesson’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 4.5%.
Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, has an Earnings ESP of +0.48% and a Zacks Rank of 2. BDX has an estimated long-term growth rate of 10.1%.
BD’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 5.8%.
Image: Bigstock
Ecolab (ECL) to Report Q2 Earnings: What's in the Offing?
Ecolab, Inc. (ECL - Free Report) is scheduled to report second-quarter 2023 results on Aug 1, before the opening bell.
In the last reported quarter, the company’s earnings per share (EPS) of 88 cents surpassed the Zacks Consensus Estimate by 2.3%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on three occasions and missed once, delivering an earnings surprise of 0.9%, on average.
Let’s see how things have shaped up for Ecolab prior to this announcement.
Global Industrial
The Global Industrial segment, comprising the Water, Food & Beverage, Paper and Downstream units, witnessed a sales uptick in the first quarter of 2023. Per the company’s first-quarter earnings call in May, the water business has been performing well for the past few months. Per management, volume has been positive as it has been helping its customers to produce better and more products, while reducing their water usage. With a reduction in water usage, customers can reduce their energy usage, carbon footprint and, in turn, their costs. This will likely make them invest in Ecolab. This is likely to have significantly boosted the company’s second-quarter revenues.
We estimate the second-quarter Global Industrial segment revenues to be $1.86 billion, suggesting an uptick of 9.1% from the year-ago quarter’s reported figure.
Ecolab Inc. Price and EPS Surprise
Ecolab Inc. price-eps-surprise | Ecolab Inc. Quote
Global Institutional & Specialty
Ecolab’s Global Institutional & Specialty segment recorded strong growth in the last reported quarter, courtesy of the company’s performance in the Institutional and Specialty divisions. The Institutional division reflected strong pricing and new business wins. Specialty sales showed robust growth on the back of strong quickservice sales growth.
On first-quarter 2023 earnings call, Ecolab’s management confirmed that the repositioning of the Institutional business has been progressing well, as demonstrated by strong sales growth and margin leverage within the segment.
Per management, people order online and use takeout much more than before, translating to lower dine-in traffic. However, on the same call, Ecolab confirmed that the restaurant operators have been selling the same or more at a lower service cost as they have fewer people staying in the dining room. Despite this decline in foot traffic in restaurants, the company has gained market share. Per management, its teams have managed to drive share, pricing and innovation to ensure Ecolab’s continued strength in the segment. This raises our optimism about the company’s second-quarter revenue performance.
We estimate the second-quarter Global Institutional & Specialty segment revenues to be $1.21 billion, suggesting an improvement of 6.4% from the year-ago quarter’s reported figure.
Other Factors at Work
Rising demand for Pest Elimination (a component of Ecolab’s broader Other segment) in commercial businesses is likely to have driven the segment’s revenues in the to-be-reported quarter. Ecolab has also started to provide disinfection services for its customers, which is also likely to have driven quarterly revenues.
However, management sounded cautious regarding higher interest rates and foreign exchange fluctuations, which are expected to have softened global demand. Management’s anticipation about inflation to remain high and continued geopolitical tensions is likely to have weighed on the company’s second-quarter performance. Also, continued higher energy surcharges impacting demand and global energy costs are likely to have weighed on the second-quarter segmental revenues.
The Estimate Picture
For second-quarter 2023, the Zacks Consensus Estimate of $3.87 billion for total revenues implies an improvement of 7.9% from the prior-year quarter’s reported figure.
The consensus estimate for EPS is pegged at $1.21, implying an improvement of 10% from the prior-year period’s reported number.
What Our Model Suggests
Our proven model predicts an earnings beat for Ecolab this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Ecolab has an Earnings ESP of +0.50%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Other Stocks Worth a Look
Here are a few other medical stocks worth considering, as these also have the right combination of elements to beat on earnings this reporting cycle.
AmerisourceBergen Corporation has an Earnings ESP of +0.59% and a Zacks Rank of 2. ABC has an estimated long-term growth rate of 8.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
AmerisourceBergen’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 3.1%.
McKesson Corporation (MCK - Free Report) has an Earnings ESP of +1.93% and is a Zacks #2 Rank stock. MCK has an estimated long-term growth rate of 10.9%.
McKesson’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 4.5%.
Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, has an Earnings ESP of +0.48% and a Zacks Rank of 2. BDX has an estimated long-term growth rate of 10.1%.
BD’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 5.8%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.