With a market capitalization of approximately $45.53 billion, Ecolab Inc (ECL - Free Report) is likely to gain from a robust product portfolio and strong performance in the Global Industrial segment. However, intense competition, foreign exchange volatility, higher raw material costs and integration risks are primary headwinds.
In the past year, Ecolab’s stock has outperformed the industry. The company has returned almost 32.1%, higher than the industry’s rally of 19.1%.
Here we take a quick look at the primary factors that have been plaguing the company and discuss the prospects that ensure near-term recovery of the stock.
Why Should You Hold?
Strong performance in the Global Industrial segment is likely to boost Ecolab’s performance over the long haul.
The upside will be driven by major gains in the Water, Food & Beverage and Life Sciences units. Europe, North America and Latin America drove the Global Industrial regional growth.
By the end of the second quarter of 2018, the company announced that the second half of 2018 will register solid performance with strong organic growth in Global Industrial segment.
What’s Deterring the Stock?
The fluctuation in the cost of raw materials, especially in Europe, can have a negative impact on Ecolab. Although the company deploys effective pricing strategies to offset raw material inflation, raw material cost is expected to be a headwind, moving ahead.
Which way are the Estimates Treading?
Unhindered by persistent issues, analysts are optimistic about Ecolab.
For the current quarter, the Zacks Consensus Estimate for earnings is pegged at $1.55, reflecting growth of 13.1% on a year-over-year basis. The same for the revenues is pegged at $3.78 billion, reflecting a decline of 6% year over year.
Ecolab Inc. Price and Consensus
For 2018, the Zacks Consensus Estimate for revenues is pegged at $14.84 billion, reflecting a fall of 7.2% year over year. The same for adjusted earnings for 2018 is pegged at $5.38, indicating year-over-year rise of 14.7%.
The stock has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space are Surmodics, Inc (SRDX - Free Report) , Masimo Corporation (MASI - Free Report) and Veeva Systems (VEEV - Free Report) .
Surmodics has a long-term expected earnings growth rate of 10%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s long-term earnings growth rate is projected at 14.8%. The stock carries a Zacks Rank #2.
Veeva Systems’ long-term earnings growth rate is estimated at 19.3%. The stock sports a Zacks Rank #1.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>