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Here's Why You Should Add Ecolab (ECL) to Your Portfolio Now
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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.
This Zacks Rank #1 (Strong Buy) stock has risen 16.1% year to date compared with the industry’s 9.5% growth. The S&P 500 Composite has increased 7.6% during the same time frame.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $65.03 billion. It projects 13.3% growth over the next five years and expects to maintain a strong performance going forward. Ecolab’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 1.7%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Focus on R&D: Ecolab’s R&D program primarily covers the development and validation of the performance of new products, processes, techniques and equipment. This improves the efficiency of the existing products and service program content, and evaluates the environmental compatibility of products and technical support.
Management believes that continued R&D activities are critical to maintaining its leadership position within the industry and should provide it with a competitive edge 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 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, was seen. Improvement in Ecolab’s Healthcare business, reflecting early benefits from the diversification 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 impact Ecolab’s consolidated results of operations.
Possibility of Unsuccessful Integration: Ecolab seeks to acquire complementary businesses as part of its long-term strategy. There is 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 ones, 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 5.8% north to $6.43 per share.
The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $3.75 billion, indicating a 5% improvement from the year-ago quarter’s reported number.
Some other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora (COR - Free Report) .
DaVita, carrying a Zacks Rank #1 at present, has an estimated long-term growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 28.9% compared with the industry’s 9.6% growth in the past year.
Cardinal Health, carrying a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14.2%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 10.4% year to date compared with the industry’s 6.2% growth.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 18.4% year to date compared with the industry’s 6.9% growth.
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Here's Why You Should Add Ecolab (ECL) to Your Portfolio Now
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.
This Zacks Rank #1 (Strong Buy) stock has risen 16.1% year to date compared with the industry’s 9.5% growth. The S&P 500 Composite has increased 7.6% during the same time frame.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $65.03 billion. It projects 13.3% growth over the next five years and expects to maintain a strong performance going forward. Ecolab’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 1.7%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Focus on R&D: Ecolab’s R&D program primarily covers the development and validation of the performance of new products, processes, techniques and equipment. This improves the efficiency of the existing products and service program content, and evaluates the environmental compatibility of products and technical support.
Management believes that continued R&D activities are critical to maintaining its leadership position within the industry and should provide it with a competitive edge 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 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, was seen. Improvement in Ecolab’s Healthcare business, reflecting early benefits from the diversification 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 impact Ecolab’s consolidated results of operations.
Possibility of Unsuccessful Integration: Ecolab seeks to acquire complementary businesses as part of its long-term strategy. There is 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 ones, 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 5.8% north to $6.43 per share.
The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $3.75 billion, indicating a 5% improvement from the year-ago quarter’s reported number.
Ecolab Inc. Price
Ecolab Inc. price | Ecolab Inc. Quote
Other Key Picks
Some other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora (COR - Free Report) .
DaVita, carrying a Zacks Rank #1 at present, has an estimated long-term growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 28.9% compared with the industry’s 9.6% growth in the past year.
Cardinal Health, carrying a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14.2%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 10.4% year to date compared with the industry’s 6.2% growth.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 18.4% year to date compared with the industry’s 6.9% growth.