Ecolab Inc. (ECL Quick QuoteECL - Free Report) has been gaining from its solid product portfolio. The optimism, led by a solid third-quarter 2024 performance, along with continued focus on research and development, is expected to contribute further. However, macroeconomic concerns persist.

This Zacks Rank #3 (Hold) stock has rallied 6.5% in the past six months compared with the industry’s 0.1% growth. The S&P 500 Composite has increased 15.6% during the same time frame.

The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $70.65 billion. It projects 12.2% growth for the next five years and expects to maintain a strong performance in the future. Ecolab’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 0.79%.

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Reasons Favoring Ecolab’s Growth

Strong Product Portfolio: Ecolab is a global leader in water, hygiene, and infection prevention solutions, offering comprehensive products, data-driven insights, and personalized services to enhance food safety, sustainability, and operational efficiency across more than 170 countries. Serving diverse sectors like foodservice, healthcare, hospitality, and industrial processes, Ecolab provides solutions for cleaning, sanitizing, pest elimination, and water treatment. Its Water business delivers specialty products such as scale inhibitors, antifoulants, and advanced technologies like 3D TRASAR, which integrates chemistry, remote monitoring, and control to achieve environmental and economic benefits while supporting clean and safe environments.

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 existing ones, enhancing service program content and evaluating the environmental compatibility of products and technical support. Key disciplines include analytical and formulation chemistry, microbiology, data science and predictive analytics, process and packaging engineering, digital and remote monitoring engineering and product dispensing technology.

Substantially, all of Ecolab’s principal products have been developed by its research, development and engineering personnel. 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. With nearly $1.5 billion, Ecolab’s 2024 pipeline was at record levels and remains focused on the opportunities across clean tech, high tech and biotech platforms.

Strong Q3 Results: Ecolab’s solid third-quarter 2024 results buoy optimism. The company registered a robust year-over-year uptick in its bottom line and growth in its organic revenues. Revenue growth was driven by strong performance in the Institutional & Specialty and Industrial segments. Lower delivered product costs, value-based pricing and volume growth during the quarter were encouraging.

Per Ecolab, the completion of the sale of its global surgical solutions business marks a strategic shift for the company, enabling it to focus on its core competencies in infection prevention and instrument reprocessing. In the third quarter, ECL’s gross and operating margin expanded 230 and 250 basis points, respectively. This bodes well for the stock.

A Factor That May Offset ECL’s Gains

Macroeconomic Factors: Ecolab's international operations are significantly impacted by economic conditions, currency exchange rates, and political uncertainties. Following the invasion of Ukraine and ongoing sanctions, the company has restricted its Russian business to essential operations in healthcare, life sciences, food and beverage, and certain water services, with the potential for further reductions.

Economic instability in countries like Argentina and Turkey, or similar disruptions elsewhere, could negatively impact Ecolab's consolidated results by reducing local economic activity and weakening local currencies against the U.S. dollar, leading to decreased sales and earnings from foreign operations.

Estimate Trend

Ecolab is witnessing a negative estimate revision trend for 2025. In the past 30 days, the Zacks Consensus Estimate for its earnings has moved 11 cents south to $7.36 per share.

The Zacks Consensus Estimate for the company’s fourth-quarter 2024 revenues is pegged at $3.97 billion, indicating a 0.9% improvement from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Masimo (MASI Quick QuoteMASI - Free Report) , ResMed Inc. (RMD Quick QuoteRMD - Free Report) and Cardinal Health (CAH Quick QuoteCAH - Free Report) .

Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 11.8% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 51.4% compared with the industry’s 6.8% growth in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

ResMed, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 14.8%. RMD’s earnings surpassed estimates in each of the trailing four quarters, with the average being 6.4%.

ResMed has gained 32.4% compared with the industry’s 16.5% growth in the past year.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.5%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.2%.

Cardinal Health’s shares have gained 21.7% compared with the industry’s 6.1% growth in the past year.