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Here's Why You Should Add Ecolab (ECL) to Your Portfolio
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Ecolab Inc. (ECL - Free Report) has been gaining from its focus on research and development (R&D). The optimism led by a solid fourth-quarter 2023 performance, along with its solid product portfolio, is expected to contribute further. However, concerns arising from cost fluctuations and the possibility of unsuccessful integration persist.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 40.3% compared with a 21.8% rise of the industry and 27.1% growth of the S&P 500 Composite.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $64.49 billion. It projects 13.3% growth for the next five years and expects to maintain a strong performance. Ecolab’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 1.7%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Focus on R&D: Ecolab’s R&D program consists principally of developing and validating the performance of new products, processes, techniques and equipment, improving the efficiency of those already existing, improving service program content, evaluating the environmental compatibility of products and technical support. Management believes continued R&D activities are critical to maintaining its leadership position within the industry and will provide it with a competitive advantage as it seeks additional business with new and existing customers.
Product Portfolio: We are optimistic about Ecolab’s cleaning and sanitizing programs and products and pest elimination services that support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors. The company’s products and technologies are also used in water treatment, pollution control, energy conservation, refining, primary metals manufacturing, papermaking, mining and other industrial processes.
Strong Q4 Results: Ecolab’s solid fourth-quarter 2023 results buoy our optimism. The company registered a robust year-over-year uptick in its top and bottom lines, along with solid performances across the majority of its segments. Strong pricing momentum backed by strong customer value and a strong pipeline of breakthrough technologies were seen. Improvement in Ecolab’s Healthcare business, reflecting early benefits from the separation of its North American operations into two focused businesses, was also witnessed.
Downsides
Cost Fluctuations: The prices of raw materials used in Ecolab’s business can fluctuate from time to time. In recent years, the company has experienced periods of increased raw material costs. Changes in raw material prices and the unavailability of adequate and reasonably priced raw materials or substitutes for the same can materially and adversely affect Ecolab’s consolidated results of operations.
Possibility of Unsuccessful Integration: Ecolab seeks to acquire complementary businesses as part of its long-term strategy. There can be no assurance that it will find attractive acquisition candidates or succeed at effectively managing the integration of acquired businesses. If the underlying business performance of such acquired businesses deteriorates or Ecolab fails to successfully integrate new businesses into its existing businesses, the company’s consolidated results of operations could be adversely affected.
Estimate Trend
Ecolab is witnessing a positive estimate revision trend for 2024. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 6.5% north to $6.39.
The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $3.75 billion, suggesting a 5% improvement from the year-ago quarter’s reported number.
Other Key Picks
A few other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 56.8% compared with the industry’s 18.9% rise in the past year.
Cardinal Health, flaunting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 50.9% compared with the industry’s 13.7% rise in the past year.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 50.7% compared with the industry’s 0.5% rise in the past year.
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Here's Why You Should Add Ecolab (ECL) to Your Portfolio
Ecolab Inc. (ECL - Free Report) has been gaining from its focus on research and development (R&D). The optimism led by a solid fourth-quarter 2023 performance, along with its solid product portfolio, is expected to contribute further. However, concerns arising from cost fluctuations and the possibility of unsuccessful integration persist.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 40.3% compared with a 21.8% rise of the industry and 27.1% growth of the S&P 500 Composite.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $64.49 billion. It projects 13.3% growth for the next five years and expects to maintain a strong performance. Ecolab’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 1.7%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Focus on R&D: Ecolab’s R&D program consists principally of developing and validating the performance of new products, processes, techniques and equipment, improving the efficiency of those already existing, improving service program content, evaluating the environmental compatibility of products and technical support. Management believes continued R&D activities are critical to maintaining its leadership position within the industry and will provide it with a competitive advantage as it seeks additional business with new and existing customers.
Product Portfolio: We are optimistic about Ecolab’s cleaning and sanitizing programs and products and pest elimination services that support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors. The company’s products and technologies are also used in water treatment, pollution control, energy conservation, refining, primary metals manufacturing, papermaking, mining and other industrial processes.
Strong Q4 Results: Ecolab’s solid fourth-quarter 2023 results buoy our optimism. The company registered a robust year-over-year uptick in its top and bottom lines, along with solid performances across the majority of its segments. Strong pricing momentum backed by strong customer value and a strong pipeline of breakthrough technologies were seen. Improvement in Ecolab’s Healthcare business, reflecting early benefits from the separation of its North American operations into two focused businesses, was also witnessed.
Downsides
Cost Fluctuations: The prices of raw materials used in Ecolab’s business can fluctuate from time to time. In recent years, the company has experienced periods of increased raw material costs. Changes in raw material prices and the unavailability of adequate and reasonably priced raw materials or substitutes for the same can materially and adversely affect Ecolab’s consolidated results of operations.
Possibility of Unsuccessful Integration: Ecolab seeks to acquire complementary businesses as part of its long-term strategy. There can be no assurance that it will find attractive acquisition candidates or succeed at effectively managing the integration of acquired businesses. If the underlying business performance of such acquired businesses deteriorates or Ecolab fails to successfully integrate new businesses into its existing businesses, the company’s consolidated results of operations could be adversely affected.
Estimate Trend
Ecolab is witnessing a positive estimate revision trend for 2024. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 6.5% north to $6.39.
The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $3.75 billion, suggesting a 5% improvement from the year-ago quarter’s reported number.
Other Key Picks
A few other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 56.8% compared with the industry’s 18.9% rise in the past year.
Cardinal Health, flaunting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 50.9% compared with the industry’s 13.7% rise in the past year.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 50.7% compared with the industry’s 0.5% rise in the past year.