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Can Global Industrial Unit Drive Ecolab's (ECL) Q1 Earnings?

Zacks Equity Research

Ecolab Inc. ECL is scheduled to report first-quarter 2020 results on Apr 28, before the opening bell. The company’s core Global Industrial unit is likelyto have contributed significantly in the quarter despite foreign exchange headwinds.

Ecolab reported a negative earnings surprise of 1.2% in the last reported quarter, with the trailing four-quarter negative surprise being 0.02%, on average.

Q1 Estimate Picture

For the to-be-reported quarter, the Zacks Consensus Estimate for revenues is pegged at $3.51 billion, suggesting an improvement of 0.1% from the year-ago quarter. The same for adjusted earnings per share (EPS) is at $1.07, indicating an increase of 3.9%.

Let’s delve deeper.    

Global Industrial Likely to Drive Q1

The Global Industrial segment is likely to have gained from the Water, Food & Beverage  and Life Sciences sub-units in the first quarter.

Ecolab’s subsidiary Nalco Water opened a customer experience center at its production plant. Notably, through this initiative, the company aims to demonstrate how its technologies can reduce water use and optimize costs. Nalco Water’s LegionGuard LG25 is also likely to have contributed to the segment’s first-quarter revenues.

Under its Food & Beverage sub-unit, the company launched Eco-Flex Teat Dip, an udder care solution to prevent infection among dairy cows, reduce cost of maintaining animal health and ensure quality milk. This is likely to have bolstered the Food & Beverage business in the first quarter.

Ecolab Inc. Price and EPS Surprise

 

Ecolab Inc. Price and EPS Surprise

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

Solid growth prospects in the food retail segment banking on net new business gains are expected to get reflected in the results for the quarter to be reported.

The Zacks Consensus Estimate for the segment’s first-quarter earnings is pegged at $1.32 billion, suggesting a year-over-year increase of 2.3%.

Other Factors at Work

The company’s Global Institutional unit is expected to have seen a solid quarter.

The consensus estimate for first-quarter revenues is pinned at $1.23 billion, indicating a rise of 1.7% from the year-ago quarter.

Prudent acquisitions are expected to have been a key factor. Management is particularly optimistic about the Gallay Medical & Scientific takeover, which is expected to have continued boosting Ecolab’s healthcare and acute care portfolio in the to-be-reported quarter. Strong sales within Healthcare Europe are likely to have driven growth as well.

Ecolab’s enhanced healthcare offerings include the next generation of open basin fluid warming systems viz. the CoreTemp Fluid Management System, which is expected to have boosted the Healthcare business.

The company expects first-quarter adjusted EPS within $1.05 to $1.13, suggesting an improvement of 2% to 10% from the year-ago quarter.

However, the company expects an unfavorable impact of 5 cents per share from the coronavirus outbreak on first-quarter earnings.

Earnings Whispers

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. This is not the case here as you will see below.

Earnings ESP: Ecolab has an Earnings ESP of -1.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this time around.

Chemed Corporation CHE has an Earnings ESP of +0.42% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aphria Inc. APHA has an Earnings ESP of +35.71% and a Zacks Rank #2.

DexCom, Inc. DXCM has an Earnings ESP of +143.90% and a Zacks Rank of 2.

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Ecolab Inc. (ECL) : Free Stock Analysis Report
 
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