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Ecolab Gains From Strength in Global Industrial Segment

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On Mar 5, we issued an updated research report on Ecolab Inc. ECL. The stock carries a Zacks Rank #3 (Hold). Lately, Ecolab has been gaining prominence owing to Global-Industrial segmental growth in Europe, North America and Latin America. However, the company exited the fourth quarter on an unfavorable note, missing the Zacks Consensus Estimate on both the counts.

In the past year, Ecolab’s stock has outperformed the industry. The company’s shares have returned almost 3.5%, higher than the industry’s 3.1% rally. Sales in the Global-Industrial segment grew 6.1% year over year to almost $1.29 billion. The upside was driven by major gains in Water, Food & Beverage and Life Sciences unit.

Ecolab Inc. Price


Ecolab Inc. Price | Ecolab Inc. Quote

Ecolab continues to see improvement in underlying sales volume and pricing in most of its business segments. A robust portfolio, product launches and expanding customer base drove organic sales, while the realization of targeted synergies associated with acquisitions boosted margins.

The company is currently emphasizing on product innovation, sales organization, volume growth, appropriate pricing and merger synergies along with rationalization of operating costs. We believe that the excellent combination of advanced cleaning & sanitizing technologies, water treatment and pest elimination capabilities will drive the company’s overall growth in 2018 and beyond.

On the flip side, despite strength in Pest Elimination business, the Other segment declined year over year on a reported basis in the fourth quarter.

The company operates in highly competitive markets, which might mar prospects over the long haul. We believe that volatility in foreign currency exchange rates will remain a significant headwind for the company. Ecolab faces pricing pressure in the Energy segment which is likely to hurt profits.

Key Picks

A few better-ranked stocks in the broader medical sector are MEDNAX, Inc. MD, ICU Medical, Inc. ICUI and athenahealth, Inc. ATHN. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

athenahealth has a projected long-term growth rate of 20.7%. The stock delivered a positive earnings surprise of 73.4% in the last quarter.

MEDNAX has an expected long-term growth rate of 10%. The stock posted a positive earnings surprise of 3.6% in the last quarter.

ICU Medical has an expected long-term growth rate of 10%. The stock delivered a positive earnings surprise of 204.1% last quarter.

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