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Ecolab (ECL) Launches SMARTPOWER for Warewashing Efficiency

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In a bid to enhance food safety and deliver world-class warewashing results in restaurants, Ecolab Inc. (ECL - Free Report) recently launched the SMARTPOWER Program. Notably, the platform’s focus is on warewashing — a process of collecting dirty kitchen ware and cutlery, washing and rinsing them.

The dynamic SMARTPOWER platform reduces labor, water and energy costs. Per management, the program will be rolled out this year in the United States and later in Europe.

We believe, the latest development is likely to help Ecolab fortify its position in the food-hygiene space. In fact, the company recently launched a dynamic Health Department Intelligence (HDI) platform as well, to focus on food safety. The HDI platform retrieves and manages health department inspection data for foodservice operators and provides insights to help address food safety risks. This will help the company improve health inspection performance and manage food safety risks efficiently (read more: Ecolab Rolls Out HDI for Improved Food Surveillance).

Supported by developments like these, Ecolab’s shares have rallied 14.4% compared with the industry’s rise of 2.4% in a year’s time.

Why SMARTPOWER?

SMARTPOWER is a complete warewashing program that uses proprietary chemistry and advanced cloud computing to provide skilled service, resulting in cost-effective operations, especially for restaurateurs. Per management, the advanced new chemistry helps in decomposing the buildup on wares and prevents soils from reattaching.

Moreover, real-time insights on warewashing performance and personalized service will help customers identify the trends in operations. This can reduce customers’ daily dish racks up to 10%, thereby lowering the total cost.

The positive results followed extensive testing across 300 foodservice environments in 21 countries. Per management, users of SMARTPOWER have reported a significant increase in wares usable for guests after the first wash, which eliminates the need to rewash them.

According to bizfluent, labor is the single largest expense category for majority of restaurants. The average labor cost for a financially sustainable restaurant is 30-35% of gross sales, with 20% going to pay wage-earning staff such as servers and an additional 10-15% going to pay salaried workers such as managers. The use of real-time data in its applications has helped the company bolster its footprint in the Healthcare IT space.

Market Prospects

Per Orbis Research, industry analysts forecast that the Commercial Food services Equipment market in the United States will witness a CAGR of 5.51% during the period 2017-2021.

On the other hand, ResearchAndMarkets opines that the global healthcare IT solutions market is expected to reach $223.16 billion by 2023 at a CAGR of 13.7% during the period of 2018 to 2023.

Thus, it can be concluded that Ecolab’s move has been timely and strategic.

Zacks Rank & Key Picks

Ecolab currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space are Abiomed, Inc. , Genomic Health Inc. and Varian Medical Systems, Inc. .

Abiomed has a long-term earnings growth rate of 27%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Genomic Health has an expected earnings growth rate of 187.5% and a Zacks Rank of 1.

Varian Medical has a projected long-term earnings growth rate of 8%. The stock carries a Zacks Rank #2 (Buy).

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