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In the last reported quarter, the company’s earnings of $1.27 per share surpassed the Zacks Consensus Estimate by 1.6%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on two occasions, missed the same on one and broke even on the other, delivering an earnings surprise of 0.3%, on average.
Let’s see how things have shaped up for Ecolab prior to this announcement.
Global Industrial
The Global Industrial segment, comprising the Water, Food & Beverage, Paper and Downstream units, witnessed a sales uptick in the fourth quarter of 2022. Per the company’s fourth-quarter 2022 earnings call in February, the continued demand for clean water, safe food and prevention of infections in its China business have been contributing to the segment’s strength in the region. Management confirmed that although Ecolab had a decent performance in the region in the fourth quarter, the first quarter is likely to have been messy due to the new year happening with the shutdown and reopening. This is likely to have weighed on the company’s results in this region in the first quarter of 2023.
On the same call, management confirmed that the Global Industrial segment was in a good place on the back of a booming market. However, management sounded cautious regarding higher interest rates, which are expected to soften the demand for the segment’s products. Management also stated that it has been witnessing some softening in the demand of individual customers and expects same-store sales demand from its customers to be lower. This is also likely to have dragged Ecolab’s revenues in the first quarter.
On the fourth-quarter earnings call, Ecolab confirmed that its Water business continued to register strong momentum. Rising water scarcity issues, the need for net zero carbon and water and rising demand for water are likely to have kept the momentum going. This is expected to have considerably driven the first-quarter 2023 top line.
Given Ecolab's expertise in water management and water reduction, and helping customers operate with less or zero water, it is likely to increase demand for its products. Per management, for the petrochemicals business, the company has shifted toward water management, energy footprint reduction and cost reduction. Ecolab's customers are currently looking for solutions to reduce their environmental footprint, while reducing their costs at the same time. This is likely to have continued significantly in the to-be-reported quarter, thus driving up revenues.
We estimate the first-quarter Global Industrial segment revenues to be $1.64 billion, suggesting an uptick of 5.2% from the year-ago quarter’s reported figure.
Ecolab’s Global Institutional & Specialty segment recorded strong growth in the last reported quarter, courtesy of the company’s performance in the Institutional and Specialty divisions. The Institutional division reflected strong pricing and business wins. Specialty sales showed robust growth on the back of strong quickservice sales growth and modest gains in food retail.
On the fourth-quarter 2022 earnings call, management confirmed that in the United States, the market for dine-in traffic has changed because of the return-to-office. Per management, people order online and use takeout much more than they did previously, translating to lower dine-in traffic. This is likely to have weighed on the company’s business, thereby lowering its revenues in the first quarter of 2023.
However, the segment is likely to have been adversely affected by labor challenges, especially on the cost side, and rising food and energy costs, which are expected to have increased further.
We estimate the first-quarter Global Institutional & Specialty segment revenues to be $1.06 billion, suggesting an improvement of 5.1% from the year-ago quarter’s reported figure.
Other Factors at Work
Rising demand for Pest Elimination (a component of Ecolab’s broader Other segment) in food and beverage plants to avoid food safety issues is likely to have driven the segment’s revenues in the to-be-reported quarter. Ecolab has also started to provide disinfection services for its customers, which is likely to have driven quarterly revenues.
However, a higher energy surcharge due to the war and the energy crisis impacting demand and global energy costs is likely to have weighed on fourth-quarter segmental revenues.
On the international front, Ecolab had stated during its fourth-quarter earnings call that it was expecting inflation to remain high throughout 2023, interest rates to move higher and have an increasing impact on demand in most markets, and geopolitics in Europe, China and the Middle East to remain unpredictable. These are likely to have weighed on the company’s revenues in the to-be-reported quarter.
The Estimate Picture
For first-quarter 2023, the Zacks Consensus Estimate of $3.47 billion for total revenues implies an improvement of 6.2% from the prior-year quarter’s reported figure.
Our projection of first-quarter revenues is pegged at $3.34 billion, indicating a year-over-year uptick of 2.3%.
The consensus estimate for earnings per share is pegged at 86 cents, implying an improvement of 4.9% from the prior-year period’s reported number.
Our projection of adjusted earnings per share is pegged at 82 cents.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has higher chances of beating estimates. However, this is not the case here.
Earnings ESP: Ecolab has an Earnings ESP of -0.59%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +0.99% and a Zacks Rank of 2. HSIC has an estimated long-term growth rate of 8.1%.
Humana Inc. (HUM - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank of 2. HUM has an estimated long-term growth rate of 14.3%.
Humana’s earnings surpassed estimates in all the trailing four quarters, the average beat being 12.9%.
Nevro Corp. (NVRO - Free Report) has an Earnings ESP of +0.41% and carries a Zacks Rank of 2 at present. NVRO has an estimated growth rate of 26.8% for 2024.
Nevro’s earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average surprise being 6.6%.
Image: Bigstock
Ecolab (ECL) to Report Q1 Earnings: What's in the Offing?
Ecolab, Inc. (ECL - Free Report) is scheduled to report first-quarter 2023 results on May 2, before the opening bell.
In the last reported quarter, the company’s earnings of $1.27 per share surpassed the Zacks Consensus Estimate by 1.6%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on two occasions, missed the same on one and broke even on the other, delivering an earnings surprise of 0.3%, on average.
Let’s see how things have shaped up for Ecolab prior to this announcement.
Global Industrial
The Global Industrial segment, comprising the Water, Food & Beverage, Paper and Downstream units, witnessed a sales uptick in the fourth quarter of 2022. Per the company’s fourth-quarter 2022 earnings call in February, the continued demand for clean water, safe food and prevention of infections in its China business have been contributing to the segment’s strength in the region. Management confirmed that although Ecolab had a decent performance in the region in the fourth quarter, the first quarter is likely to have been messy due to the new year happening with the shutdown and reopening. This is likely to have weighed on the company’s results in this region in the first quarter of 2023.
On the same call, management confirmed that the Global Industrial segment was in a good place on the back of a booming market. However, management sounded cautious regarding higher interest rates, which are expected to soften the demand for the segment’s products. Management also stated that it has been witnessing some softening in the demand of individual customers and expects same-store sales demand from its customers to be lower. This is also likely to have dragged Ecolab’s revenues in the first quarter.
On the fourth-quarter earnings call, Ecolab confirmed that its Water business continued to register strong momentum. Rising water scarcity issues, the need for net zero carbon and water and rising demand for water are likely to have kept the momentum going. This is expected to have considerably driven the first-quarter 2023 top line.
Given Ecolab's expertise in water management and water reduction, and helping customers operate with less or zero water, it is likely to increase demand for its products. Per management, for the petrochemicals business, the company has shifted toward water management, energy footprint reduction and cost reduction. Ecolab's customers are currently looking for solutions to reduce their environmental footprint, while reducing their costs at the same time. This is likely to have continued significantly in the to-be-reported quarter, thus driving up revenues.
We estimate the first-quarter Global Industrial segment revenues to be $1.64 billion, suggesting an uptick of 5.2% from the year-ago quarter’s reported figure.
Ecolab, Inc. Price and EPS Surprise
Ecolab, Inc. price-eps-surprise | Ecolab, Inc. Quote
Global Institutional & Specialty
Ecolab’s Global Institutional & Specialty segment recorded strong growth in the last reported quarter, courtesy of the company’s performance in the Institutional and Specialty divisions. The Institutional division reflected strong pricing and business wins. Specialty sales showed robust growth on the back of strong quickservice sales growth and modest gains in food retail.
On the fourth-quarter 2022 earnings call, management confirmed that in the United States, the market for dine-in traffic has changed because of the return-to-office. Per management, people order online and use takeout much more than they did previously, translating to lower dine-in traffic. This is likely to have weighed on the company’s business, thereby lowering its revenues in the first quarter of 2023.
However, the segment is likely to have been adversely affected by labor challenges, especially on the cost side, and rising food and energy costs, which are expected to have increased further.
We estimate the first-quarter Global Institutional & Specialty segment revenues to be $1.06 billion, suggesting an improvement of 5.1% from the year-ago quarter’s reported figure.
Other Factors at Work
Rising demand for Pest Elimination (a component of Ecolab’s broader Other segment) in food and beverage plants to avoid food safety issues is likely to have driven the segment’s revenues in the to-be-reported quarter. Ecolab has also started to provide disinfection services for its customers, which is likely to have driven quarterly revenues.
However, a higher energy surcharge due to the war and the energy crisis impacting demand and global energy costs is likely to have weighed on fourth-quarter segmental revenues.
On the international front, Ecolab had stated during its fourth-quarter earnings call that it was expecting inflation to remain high throughout 2023, interest rates to move higher and have an increasing impact on demand in most markets, and geopolitics in Europe, China and the Middle East to remain unpredictable. These are likely to have weighed on the company’s revenues in the to-be-reported quarter.
The Estimate Picture
For first-quarter 2023, the Zacks Consensus Estimate of $3.47 billion for total revenues implies an improvement of 6.2% from the prior-year quarter’s reported figure.
Our projection of first-quarter revenues is pegged at $3.34 billion, indicating a year-over-year uptick of 2.3%.
The consensus estimate for earnings per share is pegged at 86 cents, implying an improvement of 4.9% from the prior-year period’s reported number.
Our projection of adjusted earnings per share is pegged at 82 cents.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has higher chances of beating estimates. However, this is not the case here.
Earnings ESP: Ecolab has an Earnings ESP of -0.59%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +0.99% and a Zacks Rank of 2. HSIC has an estimated long-term growth rate of 8.1%.
Henry Schein’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Humana Inc. (HUM - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank of 2. HUM has an estimated long-term growth rate of 14.3%.
Humana’s earnings surpassed estimates in all the trailing four quarters, the average beat being 12.9%.
Nevro Corp. (NVRO - Free Report) has an Earnings ESP of +0.41% and carries a Zacks Rank of 2 at present. NVRO has an estimated growth rate of 26.8% for 2024.
Nevro’s earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average surprise being 6.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.