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Reasons to Retain Ecolab (ECL) Stock in Your Portfolio Now
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Ecolab Inc. (ECL - Free Report) has been gaining from its solid product portfolio. The optimism, led by a solid second-quarter 2024 performance, along with its focus on research and development, is expected to contribute further. However, concerns arising from stiff competition persist.
This Zacks Rank #3 (Hold) stock has rallied 19.6% year to date against the industry’s 20.9% decline. The S&P 500 Composite has increased 12.2% during the same time frame.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $67.7 billion. It projects 14.9% growth over the next five years and expects to maintain a strong performance in the future. Ecolab’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 0.98%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Solid Product Portfolio: Due to its strong line of products, Ecolab has been able to strengthen its position in the specialized market on a global scale. Ecolab provides thorough solutions, data-driven insights, and individualized care to promote food safety and maintain clean and safe environments. Additionally, it offers services and solutions that help clients in the food, healthcare, hotel, and industrial sectors in more than 170 nations achieve sustainable practices, increased operating efficiencies, and reduced water and energy use.
Ecolab’s cleaning and sanitizing programs and products and pest elimination services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors. The company’s products and technologies are also used in water treatment, pollution control, energy conservation, refining, primary metals manufacturing, papermaking, mining and other industrial processes.
Cost Efficiency Programs: In November 2022, Ecolab’s management approved a Europe cost-savings program. In February 2023, the company expanded this program to focus on its Institutional and Healthcare businesses in other regions. The expanded program, called The Combined Program, has delivered $137 million of cumulative cost savings with estimated annualized cost savings of $175 million in continuing operations by the end of 2024.
In August 2024, Ecolab announced the closure of the sale of its global surgical solutions business to Medline for $950 million in cash. The proceeds from this transaction are likely to enhance the company’s ability to invest in attractive growth opportunities and return capital to shareholders. The company also announced its intent to repurchase up to an additional $500 million of Ecolab’s stock during the second half of 2024.
On Jul 30, 2024, Ecolab announced the One Ecolab initiative, which is likely to enhance its growth and margin expansion journey. As a program within this initiative, the company announced that it commenced a restructuring plan to leverage its digital technologies to realign the functional work done in many countries into global centers of excellence.
Strong Q2 Results: Ecolab’s solid second-quarter 2024 results buoy optimism. The company registered a robust year-over-year uptick in its top and bottom lines, along with solid performances across most of its segments. Lower delivered product costs, value-based pricing and volume growth during the quarter were encouraging. Ecolab’s decision to sell its Global Surgical Solutions business to transform its Global Healthcare business also raises our optimism. The expansion of both margins bodes well for the stock.
Downsides
Stiff Competition: Ecolab operates in competitive markets across various segments, where a few large companies dominate, along with numerous smaller entities targeting specific regions or product ranges.
In the Global Industrial segment, competition is based on value and technical expertise. The Global Institutional & Specialty segment faces competition from both large and small international firms and local competitors focusing on specific geographies and products.
The Healthcare business within the Global Healthcare & Life Sciences segment competes mainly with companies specializing in a narrower product range, with limited global competitors, while the Life Sciences business faces several mid-size and regional competitors in Europe and North America, with more fragmented competition elsewhere.
Estimate Trend
Ecolab is witnessing a positive estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its earnings has improved 5 cents to $6.65 per share.
The Zacks Consensus Estimate for the company’s third-quarter 2024 revenues is pegged at $4.03 billion, indicating a 1.8% improvement from the year-ago quarter’s reported number.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 3.7% so far this year compared with the industry’s 10.2% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% growth.
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Reasons to Retain Ecolab (ECL) Stock in Your Portfolio Now
Ecolab Inc. (ECL - Free Report) has been gaining from its solid product portfolio. The optimism, led by a solid second-quarter 2024 performance, along with its focus on research and development, is expected to contribute further. However, concerns arising from stiff competition persist.
This Zacks Rank #3 (Hold) stock has rallied 19.6% year to date against the industry’s 20.9% decline. The S&P 500 Composite has increased 12.2% during the same time frame.
The renowned water, hygiene and infection prevention solutions and services provider has a market capitalization of $67.7 billion. It projects 14.9% growth over the next five years and expects to maintain a strong performance in the future. Ecolab’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 0.98%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Solid Product Portfolio: Due to its strong line of products, Ecolab has been able to strengthen its position in the specialized market on a global scale. Ecolab provides thorough solutions, data-driven insights, and individualized care to promote food safety and maintain clean and safe environments. Additionally, it offers services and solutions that help clients in the food, healthcare, hotel, and industrial sectors in more than 170 nations achieve sustainable practices, increased operating efficiencies, and reduced water and energy use.
Ecolab’s cleaning and sanitizing programs and products and pest elimination services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors. The company’s products and technologies are also used in water treatment, pollution control, energy conservation, refining, primary metals manufacturing, papermaking, mining and other industrial processes.
Cost Efficiency Programs: In November 2022, Ecolab’s management approved a Europe cost-savings program. In February 2023, the company expanded this program to focus on its Institutional and Healthcare businesses in other regions. The expanded program, called The Combined Program, has delivered $137 million of cumulative cost savings with estimated annualized cost savings of $175 million in continuing operations by the end of 2024.
In August 2024, Ecolab announced the closure of the sale of its global surgical solutions business to Medline for $950 million in cash. The proceeds from this transaction are likely to enhance the company’s ability to invest in attractive growth opportunities and return capital to shareholders. The company also announced its intent to repurchase up to an additional $500 million of Ecolab’s stock during the second half of 2024.
On Jul 30, 2024, Ecolab announced the One Ecolab initiative, which is likely to enhance its growth and margin expansion journey. As a program within this initiative, the company announced that it commenced a restructuring plan to leverage its digital technologies to realign the functional work done in many countries into global centers of excellence.
Strong Q2 Results: Ecolab’s solid second-quarter 2024 results buoy optimism. The company registered a robust year-over-year uptick in its top and bottom lines, along with solid performances across most of its segments. Lower delivered product costs, value-based pricing and volume growth during the quarter were encouraging. Ecolab’s decision to sell its Global Surgical Solutions business to transform its Global Healthcare business also raises our optimism. The expansion of both margins bodes well for the stock.
Downsides
Stiff Competition: Ecolab operates in competitive markets across various segments, where a few large companies dominate, along with numerous smaller entities targeting specific regions or product ranges.
In the Global Industrial segment, competition is based on value and technical expertise. The Global Institutional & Specialty segment faces competition from both large and small international firms and local competitors focusing on specific geographies and products.
The Healthcare business within the Global Healthcare & Life Sciences segment competes mainly with companies specializing in a narrower product range, with limited global competitors, while the Life Sciences business faces several mid-size and regional competitors in Europe and North America, with more fragmented competition elsewhere.
Estimate Trend
Ecolab is witnessing a positive estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its earnings has improved 5 cents to $6.65 per share.
The Zacks Consensus Estimate for the company’s third-quarter 2024 revenues is pegged at $4.03 billion, indicating a 1.8% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and ABM Industries (ABM - Free Report) . While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 3.7% so far this year compared with the industry’s 10.2% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% growth.