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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 focus on research and development (R&D). The optimism led by a solid second-quarter 2023 performance, along with its strong business, is expected to contribute further. Compliance risks and data security threats persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 15% compared with a 16.5% rise of the industry and 17.7% growth of the S&P 500 composite.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $47.85 billion. It projects 12.8% growth for the next five years and expects to maintain a strong performance. Ecolab’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average earnings surprise being 1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
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 those already existing, improving service program content, evaluating the environmental compatibility of products and technical support. 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.
Strong Business: Ecolab’s consistent delivery of considerable earnings growth despite the current challenging business environment continues to impress. Ecolab witnessed a strong second-quarter 2023 performance, which reflected continued robust organic sales growth, operating income margin expansion and growth in adjusted diluted earnings per share. Per management, pricing in the quarter remained strong, sustained by carryover from last year and further new pricing.
Management also stated that its focus on new business and penetration generated share gains and value pricing and productivity drove strong margin recovery during the quarter.
Strong Q2 Results: Ecolab’s solid second-quarter 2023 results buoy our optimism. The company registered a robust year-over-year uptick in its top and bottom lines, along with solid performances across all segments. Strong pricing momentum and steady overall volume were also recorded. The company’s digital capabilities, innovation and global service expertise are expected to lead to robust new business wins, which are encouraging.
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 operating costs.
Data Security Threat: Ecolab relies, to a large extent, upon information technology systems and infrastructure to operate its business. The size and complexity of the company’s information technology systems make them potentially vulnerable to failure, malicious intrusion and random attacks. Acquisitions have resulted in further de-centralization of systems and additional complexity in its systems infrastructure.
Estimate Trend
Ecolab is witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 2% north to $5.09.
The Zacks Consensus Estimate for the company’s third-quarter 2023 revenues is pegged at $3.98 billion, suggesting an 8.4% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , McKesson Corporation (MCK - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average surprise of 21.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has gained 14% against the industry’s 3.6% decline over the past year.
McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average of 8.1%.
McKesson has gained 30.2% compared with the industry’s 20.5% rise over the past year.
Integer Holdings, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
Integer Holdings has gained 26.4% compared with the industry’s 1.9% rise 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 focus on research and development (R&D). The optimism led by a solid second-quarter 2023 performance, along with its strong business, is expected to contribute further. Compliance risks and data security threats persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 15% compared with a 16.5% rise of the industry and 17.7% growth of the S&P 500 composite.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $47.85 billion. It projects 12.8% growth for the next five years and expects to maintain a strong performance. Ecolab’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average earnings surprise being 1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
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 those already existing, improving service program content, evaluating the environmental compatibility of products and technical support. 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.
Strong Business: Ecolab’s consistent delivery of considerable earnings growth despite the current challenging business environment continues to impress. Ecolab witnessed a strong second-quarter 2023 performance, which reflected continued robust organic sales growth, operating income margin expansion and growth in adjusted diluted earnings per share. Per management, pricing in the quarter remained strong, sustained by carryover from last year and further new pricing.
Management also stated that its focus on new business and penetration generated share gains and value pricing and productivity drove strong margin recovery during the quarter.
Strong Q2 Results: Ecolab’s solid second-quarter 2023 results buoy our optimism. The company registered a robust year-over-year uptick in its top and bottom lines, along with solid performances across all segments. Strong pricing momentum and steady overall volume were also recorded. The company’s digital capabilities, innovation and global service expertise are expected to lead to robust new business wins, which are encouraging.
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 operating costs.
Data Security Threat: Ecolab relies, to a large extent, upon information technology systems and infrastructure to operate its business. The size and complexity of the company’s information technology systems make them potentially vulnerable to failure, malicious intrusion and random attacks. Acquisitions have resulted in further de-centralization of systems and additional complexity in its systems infrastructure.
Estimate Trend
Ecolab is witnessing a positive estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 2% north to $5.09.
The Zacks Consensus Estimate for the company’s third-quarter 2023 revenues is pegged at $3.98 billion, suggesting an 8.4% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , McKesson Corporation (MCK - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average surprise of 21.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has gained 14% against the industry’s 3.6% decline over the past year.
McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average of 8.1%.
McKesson has gained 30.2% compared with the industry’s 20.5% rise over the past year.
Integer Holdings, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
Integer Holdings has gained 26.4% compared with the industry’s 1.9% rise over the past year.