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Ecolab (ECL) to Report Q2 Earnings: What's in the Offing?

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Ecolab, Inc.(ECL - Free Report) is scheduled to report second-quarter 2020 results on Jul 28, before the opening bell. The company’s core Global Industrial unit is likely to have contributed significantly in the quarter despite foreign exchange headwinds.

Ecolab reported earnings surprise of 5.6% in the last reported quarter.

Q2 Estimate Picture

For the to-be-reported quarter, the Zacks Consensus Estimate for revenues is pegged at $2.84 billion, suggesting a fall of 24.4% from the year-ago quarter. The same for adjusted earnings per share (EPS) is at 83 cents, indicating a decline of 41.6%.

Let’s delve deeper.

Global Industrial Likely to Drive Q2

The Global Industrial segment is likely to have gained from the Water, Food &Beverage and Life Sciences sub-units in the second quarter.

In June, Ecolab’s subsidiary Nalco Water launched Rapid Bio Intelligence, a total aerobic bacteria test kit that drastically simplifies water chemistry testing and compliance for cooling water systems.

In the same month, the company announced that its AdvaCare Disinfectant received the first approval from the U.S. Environmental Protection Agency (EPA). This crucial approval is for a laundry disinfectant and oxidizer emerging viral pathogen claim that is effective against SARS-CoV-2 — the virus causing COVID-19.

These developments are likely to have given a boost to the company’s Global Industrial segment in the to-be-reported quarter.

In February 2020, under its Food & Beverage sub-unit, the company launched Eco-Flex Teat Dip, an udder care solution to prevent infection among dairy cows, reduce cost of maintaining animal health and ensure quality milk. This is likely to have continued bolstering the Food & Beverage business in the second quarter.

Ecolab Inc. Price and EPS Surprise

 

Ecolab Inc. Price and EPS Surprise

Ecolab Inc. price-eps-surprise | Ecolab Inc. Quote

Solid prospects in the food retail segment banking on net new business gains are expected to get reflected in the results for the quarter to be reported.In the last-reported quarter, a shift from restaurants to food retail and increasing demand for hygiene programs drove the F&B business. This trend is likely to have continued through the second quarter.

Other Factors at Work

It is important to mention here that due to the full effect of COVID-19 volume declines owing to temporary shutdowns in key markets, the company is expected to have been impacted severely during the second quarter.

The pandemic’s impact on restaurant, hospitality, and entertainment is expected to result in a noticeable decrease at the Institutional division within the Global Institutional unit and Pest Elimination for the year and substantially in the second quarter.

Nonetheless, the Global Healthcare & Life Sciences segment is expected to have seen solid sales growth during the to-be reported quarter, attributable to sustained strength in Life Sciences.

Moreover, prudent acquisitions are expected to have been a key factor. Management is particularly optimistic about the Gallay Medical & Scientific takeover, which is expected to have continued boosting Ecolab’s healthcare and acute care portfolio in the to-be-reported quarter.

Ecolab’s enhanced healthcare offerings include the next generation of open basin fluid warming systems viz. the CoreTemp Fluid Management System, which is expected to have continued boosting the Healthcare business in the to-be-reported quarter.

Earnings Whispers

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. This is not the case here as you will see below.

Earnings ESP: Ecolab has an Earnings ESP of -12.96%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #5 (Strong Sell).

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Integra LifeSciences Holdings Corporation (IART - Free Report) has an Earnings ESP of +20.69% and a Zacks Rank of 2.

Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +6.69% and a Zacks Rank of 2.

Hologic, Inc. (HOLX - Free Report) has an Earnings ESP of +12.27% and a Zacks Rank of 3.

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