How Did Ecolab Perform in 4Q15 and 2015?
Yesterday’s Consumer Pops and Drops: ECL, CAJ, EPC, and CTB
Price movement of Ecolab
Ecolab (ECL) has a market cap of $29.6 billion. ECL fell by 7.4% to close at $100.14 per share on February 23, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -7.8%, -4.6%, and -12.5%, respectively, as of that day.
Technically, the stock has broken the support and is trading below all moving day averages. Currently, ECL is trading 5.9% below its 20-day moving average, 8.0% below its 50-day moving average, and 11.3% below its 200-day moving average.
The PowerShares Water Resource Portfolio (PHO) invests 7.6% of its holdings in Ecolab. The ETF tracks a modified liquidity-weighted index of US-listed companies that create products to conserve and purify water. The YTD price movement of PHO was -5.4% as of February 22, 2016.
The market caps of Ecolab’s competitors are as follows:
Danaher Corporation (DHR)—$59.8 billion
Rollins (ROL)—$5.9 billion
ServiceMaster Global Holdings (SERV)—$5.4 billion
Ecolab’s performance in 4Q15 and 2015
Ecolab reported 4Q15 net sales of about $3.4 billion, a fall of 7.3% compared to net sales of about $3.7 billion in 4Q14. Sales of Global Industrial and Global Institutional segments rose by 4.1% and 5.4%, respectively, in 4Q15, and sales of Global Energy segment fell by 13.6% in 4Q15 over 4Q14.
Its net income and EPS (earnings per share) fell to $208.9 million and $0.69, respectively, in 4Q15, compared to $335.5 million and $1.10, respectively, in 4Q14.
Ecolab de-consolidated its Venezuela operations at the end of fourth quarter. It will stop consolidating the results of its operations in its 1Q16 income statement, which should affect the local operations of Venezuelan businesses.
2015 results
In 2015, ECL reported net sales of about $13.5 billion, a fall of 5.1% YoY (year-over-year). It reported special gains and charges of $414.8 million in 2015, compared to $68.8 million in 2014. Its net income and EPS fell to nearly $1 billion and $3.32, respectively, in 2015, compared to $1.2 billion and $3.93, respectively, in 2014.
Meanwhile, its cash and cash equivalents and inventories fell by 55.7% and 5.4%, respectively, in 2015. Its current ratio fell to 0.93x and debt-to-equity ratio rose to 1.7x in 2015, compared to a current ratio and a debt-to-equity ratio of 1.1x and 1.6x, respectively, in 2014.
The price-to-earnings and price-to-book value ratios of Ecolab were 26.9x and 4.4x, respectively, as of February 23, 2016.
Projection
The company has made the following projections for fiscal 2016:
mid-single-digit fixed currency sales growth in institutional, industrial, and other segments
adjusted gross margin, excluding special gains and charges in the range of 47%–48%
adjusted tax rate of ~26%
non-controlling interest in the range of $0.06–0.10
adjusted EPS, excluding special gains and charges in the range of $4.35–$4.55
The company has made the following projections for fiscal 1Q16:
adjusted gross margin, excluding special gains and charges of ~47%
adjusted tax rate of ~26%
non-controlling interest in the range of $0.01–$0.02
adjusted EPS, excluding special gains and charges in the range of $0.73–$0.80
Now let’s take a look at J.M. Smucker Company.
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