On Jan 7, Zacks Investment Research downgraded
) to a Zacks Rank #4 (Sell) from a Zacks Rank #3 (Hold).
ECOLAB INC (ECL): Free Stock Analysis Report
FULLER(HB) CO (FUL): Free Stock Analysis
GLOBE SPECIALTY (GSM): Free Stock Analysis
SENSIENT TECH (SXT): Free Stock Analysis
To read this article on Zacks.com click here.
Why the Downgrade?
Though Ecolab has been consistently delivering good returns, the
current challenging macroeconomic conditions are expected to
impact the future performance of the company.
However, we believe that the unique business model of the company
will be able to sustain the hard times as the demand for safe
food and water, clean environments, and energy will eventually
rise in the food, healthcare, energy, hospitality and industrial
Ecolab has a vast international presence in more than 170
countries. As a result it is poised to face a major headwind in
terms of currency fluctuations. Moreover, ECL is facing severe
raw material constraints which pose a threat to its business.
The heavy burden of long term obligations in the balance sheet of
Ecolab is also a cause of concern, as high interest payments can
bring down the earnings substantially. Additionally, the stiff
competition is likely to exert pricing pressure on the company,
in turn, increasing the risk of eroding some of its market share.
Ecolab reported earnings per share (excluding special gains and
charges and discrete tax items) of $1.04 for the third quarter of
2013. The results were 3 cents ahead of the Zacks Consensus
Estimate. However, revenues of $3,484 million lagged the Zacks
Consensus Estimate of $3,543 million.
Ecolab narrowed its 2013 adjusted earnings per share guidance to
the range of $3.51−$3.55 from the earlier guided range of
$3.48−$3.56. The current Zacks Consensus Estimate for 2013 is
pegged at $3.55 per share.
Other Stocks to Consider
Investors interested in the chemical specialty industry can look
Globe Specialty Metals, Inc
HB Fuller Co.
Sensient Technologies Corporation
). All these stocks carry a Zacks Rank #2 (Buy).