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Why Is Ecolab (ECL) Up 0.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Ecolab (ECL - Free Report) . Shares have added about 0.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ecolab due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ecolab Inc. reported first-quarter 2024 adjusted earnings per share of $1.34, up 52.3% year over year. The bottom line exceeded the Zacks Consensus Estimate by 0.8%.
GAAP earnings per share for the quarter was $1.43, up 74.4% year over year.
Revenue Details
Revenues grossed $3.75 billion in the reported quarter, up 5% year over year. The metric topped the Zacks Consensus Estimate by 0.1%.
Ecolab’s organic sales increased 4.5% from the prior-year period’s level.
The year-over-year uptick in the first-quarter organic sales was driven by strong growth in the Institutional & Specialty and Pest Elimination segments and modest growth in the Industrial segment.
Segmental Analysis
The Global Industrial segment’s fixed currency sales of $1.84 billion reflect 1.9% reported growth year over year. Organic sales increased 1.2% year over year, as modest growth in Food & Beverage and Water (despite unfavorable year-over-year comparisons in mining) more than offset the expected short-term decline in Paper sales.
The Global Institutional & Specialty arm’s fixed currency sales of $1.27 billion reflect reported growth of 12.3%. Organic sales increased 10.7% year over year, with double-digit growth in both the Institutional and Specialty divisions.
The Global Healthcare and Life Sciences arm’s fixed currency sales of $382.9 million declined 0.8% both on a reported and organic basis. Per management, year-over-year organic sales declined as lower Healthcare sales were partially offset by growth in Life Sciences. Life Sciences’ performance improved and more than offset continued soft short-term industry trends.
The Global Pest Elimination segment’s fixed currency sales of $266.8 million improved 9.1% both on a reported and organic basis. Organic sales growth was driven by robust growth in food & beverage, restaurants, and food retail.
Margin Analysis
In the quarter under review, Ecolab’s gross profit improved 18.8% to $1.62 billion. The gross margin expanded 502 basis points (bps) to 43.3%.
Selling, general and administrative expenses rose 8.8% to $1.08 billion year over year.
Adjusted operating profit totaled $546.1 million, increasing 45.2% from the prior-year quarter’s level. Adjusted operating margin in the quarter also expanded 403 bps to 14.6%..
Financial Position
Ecolab exited first-quarter 2024 with cash and cash equivalents of $479.9 million compared with $919.5 million at the end of 2023. Total debt at the end of first-quarter 2024 was $7.54 billion compared with $8.18 billion at 2023-end.
Net cash provided by operating activities at the end of first-quarter 2024 was $649.4 million compared with $198.2 million a year ago.
Meanwhile, Ecolab has a consistent dividend-paying history, with a five-year annualized dividend growth of 4.44%.
Guidance
Ecolab has provided its adjusted EPS outlook for the second quarter of 2024 and upped its outlook for the full year.
The company expects its adjusted EPS for the second quarter to be in the range of $1.62-$1.72, up 31-39% from the year-ago period. The Zacks Consensus Estimate for second-quarter EPS is currently pegged at $1.52.
For 2024, Ecolab now expects its adjusted EPS in the range of $6.40-$6.70 (reflecting an uptick of 23-29% from the comparable 2023 period), up from the previous outlook of $6.10-$6.50 (reflecting an uptick of 17-25% from the comparable 2023 period). The Zacks Consensus Estimate is currently pegged at $6.42 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 9.17% due to these changes.
VGM Scores
At this time, Ecolab has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ecolab has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Ecolab is part of the Zacks Chemical - Specialty industry. Over the past month, Element Solutions (ESI - Free Report) , a stock from the same industry, has gained 1.8%. The company reported its results for the quarter ended March 2024 more than a month ago.
Element Solutions reported revenues of $575 million in the last reported quarter, representing a year-over-year change of +0.1%. EPS of $0.34 for the same period compares with $0.30 a year ago.
Element Solutions is expected to post earnings of $0.33 per share for the current quarter, representing a year-over-year change of +6.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.4%.
Element Solutions has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Why Is Ecolab (ECL) Up 0.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Ecolab (ECL - Free Report) . Shares have added about 0.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ecolab due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ecolab Q1 Earnings Surpass Estimates, Margins Rise
Ecolab Inc. reported first-quarter 2024 adjusted earnings per share of $1.34, up 52.3% year over year. The bottom line exceeded the Zacks Consensus Estimate by 0.8%.
GAAP earnings per share for the quarter was $1.43, up 74.4% year over year.
Revenue Details
Revenues grossed $3.75 billion in the reported quarter, up 5% year over year. The metric topped the Zacks Consensus Estimate by 0.1%.
Ecolab’s organic sales increased 4.5% from the prior-year period’s level.
The year-over-year uptick in the first-quarter organic sales was driven by strong growth in the Institutional & Specialty and Pest Elimination segments and modest growth in the Industrial segment.
Segmental Analysis
The Global Industrial segment’s fixed currency sales of $1.84 billion reflect 1.9% reported growth year over year. Organic sales increased 1.2% year over year, as modest growth in Food & Beverage and Water (despite unfavorable year-over-year comparisons in mining) more than offset the expected short-term decline in Paper sales.
The Global Institutional & Specialty arm’s fixed currency sales of $1.27 billion reflect reported growth of 12.3%. Organic sales increased 10.7% year over year, with double-digit growth in both the Institutional and Specialty divisions.
The Global Healthcare and Life Sciences arm’s fixed currency sales of $382.9 million declined 0.8% both on a reported and organic basis. Per management, year-over-year organic sales declined as lower Healthcare sales were partially offset by growth in Life Sciences. Life Sciences’ performance improved and more than offset continued soft short-term industry trends.
The Global Pest Elimination segment’s fixed currency sales of $266.8 million improved 9.1% both on a reported and organic basis. Organic sales growth was driven by robust growth in food & beverage, restaurants, and food retail.
Margin Analysis
In the quarter under review, Ecolab’s gross profit improved 18.8% to $1.62 billion. The gross margin expanded 502 basis points (bps) to 43.3%.
Selling, general and administrative expenses rose 8.8% to $1.08 billion year over year.
Adjusted operating profit totaled $546.1 million, increasing 45.2% from the prior-year quarter’s level. Adjusted operating margin in the quarter also expanded 403 bps to 14.6%..
Financial Position
Ecolab exited first-quarter 2024 with cash and cash equivalents of $479.9 million compared with $919.5 million at the end of 2023. Total debt at the end of first-quarter 2024 was $7.54 billion compared with $8.18 billion at 2023-end.
Net cash provided by operating activities at the end of first-quarter 2024 was $649.4 million compared with $198.2 million a year ago.
Meanwhile, Ecolab has a consistent dividend-paying history, with a five-year annualized dividend growth of 4.44%.
Guidance
Ecolab has provided its adjusted EPS outlook for the second quarter of 2024 and upped its outlook for the full year.
The company expects its adjusted EPS for the second quarter to be in the range of $1.62-$1.72, up 31-39% from the year-ago period. The Zacks Consensus Estimate for second-quarter EPS is currently pegged at $1.52.
For 2024, Ecolab now expects its adjusted EPS in the range of $6.40-$6.70 (reflecting an uptick of 23-29% from the comparable 2023 period), up from the previous outlook of $6.10-$6.50 (reflecting an uptick of 17-25% from the comparable 2023 period). The Zacks Consensus Estimate is currently pegged at $6.42 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 9.17% due to these changes.
VGM Scores
At this time, Ecolab has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ecolab has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Ecolab is part of the Zacks Chemical - Specialty industry. Over the past month, Element Solutions (ESI - Free Report) , a stock from the same industry, has gained 1.8%. The company reported its results for the quarter ended March 2024 more than a month ago.
Element Solutions reported revenues of $575 million in the last reported quarter, representing a year-over-year change of +0.1%. EPS of $0.34 for the same period compares with $0.30 a year ago.
Element Solutions is expected to post earnings of $0.33 per share for the current quarter, representing a year-over-year change of +6.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.4%.
Element Solutions has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.