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Here's Why You Should Retain Ecolab (ECL) Stock for Now
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Ecolab Inc. (ECL - Free Report) is well-poised for growth in the coming quarters, courtesy of its solid product portfolio. The optimism led by a solid third-quarter 2022 performance, along with its strong business, is expected to contribute further. Compliance risks and cost fluctuations persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 36.9% compared with 33.8% decline of the industry and 19.9% fall of the S&P 500 composite.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $41.25 billion. It projects 12.7% growth for the next five years and expects to maintain a strong performance. Ecolab’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed the same in one and matched in the other, the average earnings surprise being 0.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Product Portfolio Solid: We are upbeat about Ecolab’s solid product portfolio, which has enabled it to fortify its foothold in a niche space globally. Ecolab delivers comprehensive solutions, data-driven insights and personalized service to advance food safety and maintain clean and safe environments.
The company also provides products and services that optimize water and energy use, and improve operational efficiencies and sustainability for customers in the food, healthcare, hospitality and industrial markets in more than 170 countries around the world.
Strong Business: Ecolab’s consistent delivery of considerable earnings growth despite the current challenging business environment continues to impress. Ecolab witnessed a strong third-quarter 2022 performance, driven by continued strong sales growth, including accelerating pricing in excess of delivered product costs and further new business wins.
Management confirmed that strength in the reported quarter displayed double-digit sales growth, led by a 12% uptick in total pricing and steady underlying volume trends with year-over-year comparisons reflecting strong reopening benefits last year.
Strong Q3 Results: Ecolab’s solid third-quarter results buoy our optimism. The company registered a robust year-over-year uptick in its top line, along with solid performances across all its segments in the quarter. Ecolab’s new business wins and innovation pipelines are well-positioned to drive growth and global leadership. The company’s digital capabilities are also continuing to broaden, develop and add competitive advantages.
Downsides
Compliance Risks: Ecolab’s business is subjected to various laws and regulations relating to the environment, including evolving climate change standards and the conduct of its business. Compliance with these laws and regulations exposes the company to potential financial liability and increases its operating costs.
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, unavailability of adequate and reasonably priced raw materials or substitutes for the same, or the inability to obtain or renew supply agreements on favorable terms can materially and adversely affect Ecolab’s consolidated operations.
Estimate Trend
Ecolab is witnessing a negative estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 5.9% south to $4.47.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $3.67 billion, suggesting a 9% improvement from the year-ago quarter’s reported number.
This compares to our fourth-quarter revenue estimate of $3.64 billion, suggesting an 8.2% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
AMN Healthcare has lost 8.2% compared with the industry’s 28.1% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 8.7% against the industry’s 41.5% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 19.2% against the industry’s 7.5% decline over the past year.
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Here's Why You Should Retain Ecolab (ECL) Stock for Now
Ecolab Inc. (ECL - Free Report) is well-poised for growth in the coming quarters, courtesy of its solid product portfolio. The optimism led by a solid third-quarter 2022 performance, along with its strong business, is expected to contribute further. Compliance risks and cost fluctuations persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 36.9% compared with 33.8% decline of the industry and 19.9% fall of the S&P 500 composite.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $41.25 billion. It projects 12.7% growth for the next five years and expects to maintain a strong performance. Ecolab’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed the same in one and matched in the other, the average earnings surprise being 0.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Product Portfolio Solid: We are upbeat about Ecolab’s solid product portfolio, which has enabled it to fortify its foothold in a niche space globally. Ecolab delivers comprehensive solutions, data-driven insights and personalized service to advance food safety and maintain clean and safe environments.
The company also provides products and services that optimize water and energy use, and improve operational efficiencies and sustainability for customers in the food, healthcare, hospitality and industrial markets in more than 170 countries around the world.
Strong Business: Ecolab’s consistent delivery of considerable earnings growth despite the current challenging business environment continues to impress. Ecolab witnessed a strong third-quarter 2022 performance, driven by continued strong sales growth, including accelerating pricing in excess of delivered product costs and further new business wins.
Management confirmed that strength in the reported quarter displayed double-digit sales growth, led by a 12% uptick in total pricing and steady underlying volume trends with year-over-year comparisons reflecting strong reopening benefits last year.
Strong Q3 Results: Ecolab’s solid third-quarter results buoy our optimism. The company registered a robust year-over-year uptick in its top line, along with solid performances across all its segments in the quarter. Ecolab’s new business wins and innovation pipelines are well-positioned to drive growth and global leadership. The company’s digital capabilities are also continuing to broaden, develop and add competitive advantages.
Downsides
Compliance Risks: Ecolab’s business is subjected to various laws and regulations relating to the environment, including evolving climate change standards and the conduct of its business. Compliance with these laws and regulations exposes the company to potential financial liability and increases its operating costs.
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, unavailability of adequate and reasonably priced raw materials or substitutes for the same, or the inability to obtain or renew supply agreements on favorable terms can materially and adversely affect Ecolab’s consolidated operations.
Estimate Trend
Ecolab is witnessing a negative estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 5.9% south to $4.47.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $3.67 billion, suggesting a 9% improvement from the year-ago quarter’s reported number.
This compares to our fourth-quarter revenue estimate of $3.64 billion, suggesting an 8.2% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 8.2% compared with the industry’s 28.1% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 8.7% against the industry’s 41.5% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 19.2% against the industry’s 7.5% decline over the past year.