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Ecolab (ECL) Earnings and Revenues Miss Estimates in Q4

Zacks Equity Research

Ecolab Inc. ECL reported fourth-quarter 2019 adjusted earnings per share of $1.66, missing the Zacks Consensus Estimate of $1.68. Nonetheless, adjusted EPS rose 7.8% on a year-over-year basis.

 

This Zacks Rank #3 (Hold) company’s quarterly net sales amounted to $3.82 billion, up 1.7% from the year-ago figure. However, net sales lagged the Zacks Consensus Estimate of $3.87 billion.

 

2019 at a Glance

 

Ecolab’s 2019 revenues were $14.91 billion, missing the Zacks Consensus Estimate of $14.98 billion but increasing 1.6% from the prior-year quarter.

 

Adjusted EPS was $5.93, beating the Zacks Consensus Estimate of $5.86 and rising 13% from the year-ago quarter.

 

Segmental Analysis

 

Global Industrial

 

Sales at the segment grew 5.5% year over year to $1.47 billion, driven by solid growth in Water, Food & Beverage, and Life Sciences units. Geographically, all regions recorded impressive sales growth in the quarter.

 

Global Institutional

 

Sales improved 3.3% year over year to $1.34 billion, led by robust growth in the Specialty business. Sales at the segment significantly grew across all geographies.

Ecolab Inc. Price, Consensus and EPS Surprise

Ecolab Inc. Price, Consensus and EPS Surprise

Ecolab Inc. price-consensus-eps-surprise-chart | Ecolab Inc. Quote

Global Energy

 

Sales at the segment dropped 3% year over year to $845.4 million. Per management, upstream sales dropped slightly owing to a decline in the well-stimulation business.

 

Other

 

Sales rose 3.8% year over year to $227.4 million, reflecting strong gains in both Pest Elimination and Colloidal Technologies across all geographies.

 

Margin Analysis

 

Ecolab registered adjusted gross profit of $1.62 billion, up 4.6% year over year. As a percentage of revenues, adjusted gross margin in the fourth quarter was 42.4%, up 120 basis points (bps).

 

Adjusted operating income in the quarter was $645.6 million, up 6.9% year over year. Adjusted operating margin in the quarter was 16.9%, which expanded 80 bps year over year.

 

Guidance

 

For 2020, Ecolab expects adjusted EPS within $6.33-$6.53, calling for 9-12% growth from 2019. The Zacks Consensus Estimate for the same stands at $6.45 per share.

 

Adjusted gross margin is expected to be 42-43% of net sales.

 

For first-quarter 2020, Ecolab expects adjusted EPS within $1.05-$1.13, mirroring year-over-year growth of 6-13%. The corresponding Zacks Consensus Estimate is pegged at $1.17 per share.

 

The coronavirus outbreak is expected to have a 5-cent unfavorable impact on adjusted EPS.

 

Adjusted gross margin is expected to be 41-42% of quarterly sales.

 

Earnings of Other MedTech Majors at a Glance

 

Some better-ranked stocks — which reported solid results this earnings season — include Stryker Corporation SYK, Accuray Incorporated ARAY and IDEXX Laboratories, Inc. IDXX. You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Stryker reported fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Fourth-quarter reported revenues of $4.13 billion surpassed the Zacks Consensus Estimate by 0.7%. The company carries a Zacks Rank #2 (Buy).

 

Accuray reported second-quarter fiscal 2020 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss of 7 cents. Net revenues of $98.8 million outpaced the Zacks Consensus Estimate by 0.3%. The company sports a Zacks Rank #1.

 

IDEXX Laboratories reported fourth-quarter 2019 adjusted EPS of $1.04, which beat the Zacks Consensus Estimate of 91 cents by 14.3%. Revenues were $605.4 million, surpassing the Zacks Consensus Estimate by 0.9%. The company carries a Zacks Rank of 2.

 

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