Leading cleaning and sanitation products maker,
) is scheduled to reveal its second-quarter 2012 results before the
opening gong on Tuesday, July 31.
For the quarter, analysts polled by Zacks are currently looking
for earnings per share of 72 cents, representing an estimated
year-over-year growth of 12.50%. The corresponding Zacks Consensus
Estimate for revenues is $3,022 million.
The Minnesota-based company expects adjusted earnings between 69
cents and 72 cents a share for the quarter. The forecast assumes a
dilution of roughly 10 cents a share, primarily associated with
merger and integration costs mainly related to the Nalco Holding
merger and restructuring of operations in Europe.
With respect to earnings surprises, Ecolab has reported in line
with the Zacks Consensus Estimates in the last three quarters and
beat the Estimate on one occasion. Ecolab has produced an average
positive earnings surprise of 4.17% over the last four quarters,
implying that it has beaten the Zacks Consensus Estimate by that
First Quarter Flashback
Ecolab's first quarter earnings per share of 50 cents beat the
Zacks Consensus Estimate by 2 cents. Profits attributable to Ecolab
fell 47% year over year to $50 million (or 17 cents per share) as
growth in sales was eclipsed by charges associated with the
company's European restructuring and acquisitions.
Revenues grew 9% in comparison to the year-ago pro forma fixed
currency sales. Growth was triggered by Global Energy and Latin
American franchises along with Food & Beverage, U.S.
Institutional and Global Water segments.
Hefty restructuring charges resulted in a decline in margins.
The company repurchased $1.4 million shares in the quarter under
its share buyback program.
Estimate Revisions Trend
Estimates for the second quarter exhibit relative lack of
activity with no movements in either direction over the last 7
days. Only 1 out of 13 analysts covering the stock in this quarter
revised his/her estimate (in the upward direction) in the last 30
days. None of the analysts changes their estimates in either
direction for fiscal 2012.
Given the lack of revision, estimates for the second quarter and
full year 2012 have been stationary over the last 7 and 30 days.
The current Zacks Consensus Estimate for 2012 is $3.01 per share,
representing estimated year-over-year growth of
Ecolab's strong international presence has been driving growth
and we believe that the trend will continue in the June quarter,
buoyed by emerging markets. Asia-Pacific and Latin America
represent the key growth engines for the company's overseas
Moreover, the company is investing in marketing initiatives to
gain customer confidence overseas. Recently, the company partnered
China's State Food and Drug Administration Institute for Executive
Development ("SFDAIED") to impart training on food safety to the
local food service industry.
In addition, Ecolab extended its support to the Alliance for
Water Stewardship ("AWS") through its agreement with World Wildlife
Fund ("WWF"). Ecolab has got an excellent opportunity, via this
global commitment, to market its expertise in water management.
Along with 14 other companies, Ecolab also collaborated with the
World Health Organization ("WHO") to raise the standard of hand
hygiene in hospitals around the world by lowering health care
associated infections ("HAIs").
Ecolab expects profit in the second quarter to be boosted by
higher sales volume, pricing, margin leverage, new products as well
as synergies from acquisitions and European restructuring.
Management remains optimistic regarding improvement in
end-market demand, its ability to attract new customers and
opportunities for greater customer penetration through new product
development. Ecolab is also active on the acquisition front and
continues to explore opportunities to expand into emerging
While we derive comfort from Ecolab's strong international
exposure and recovery across its end-markets, we remain wary about
aggressive competition and impact of foreign exchange movements on
overseas sales. The company's U.S. Cleaning & Sanitizing and
International divisions face stiff competition from
Church & Dwight
We are also aware of the dilutive impact of the hefty
restructuring expenses on the company's bottom line. Our Neutral
recommendation on the stock is supported by a short-term Zacks #3
CHURCH & DWIGHT (CHD): Free Stock Analysis
CLOROX CO (CLX): Free Stock Analysis Report
ECOLAB INC (ECL): Free Stock Analysis Report
To read this article on Zacks.com click here.