), a global sanitation products company, has been added to the Dow
Jones Sustainability (DJSI) World Index as well as the DJSI North
America Index, based on its commendable sustainability initiatives.
The recognition further bolsters Ecolab's leading position as a
world-class provider of cleaning, sanitizing, food safety and
infection prevention products and services.
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The DJSI ranks large-cap companies, focusing on their financial
accomplishments which are inclusive of corporate economic,
corporate governance, environmental and social performance,
branding, risk management, climate change mitigation, labor
practices and supply chain standards. Ecolab was one of the 41
companies, out of a total of 340 companies, which were listed in
the 2012-2013 World Index.
The DJSI World Index tracks the top 10% of the world's largest
2,500 companies and the North America Index covers the top 20% of
the 600 largest companies in the U.S. and Canada. Asset managers
use these indexes as a reference point to manage sustainability
Additionally, again led by its sustainable initiatives, Ecolab has
been honored with 'The World's Most Innovative Companies' title by
Forbes magazine in its September, 2012 edition. Ecolab was ranked
31st out of 100 companies listed in the magazine.
Per Forbes, the "innovation premium" on which the companies were
evaluated is based on the higher than existing valuation of a stock
on the basis of expected innovative results for latest offerings,
services and end markets. Moreover, the members were required to
have more than $10 billion in market capitalization, 7 years of
public data and a minimum investment of 2.5% of revenues on
research and development (R&D).
The company has spent $750 million on research, development and
engineering (RD&E) in the last 5 years and holds more than
5,300 patents worldwide. Its innovations are directed at improving
quality standards of its products in an eco-friendly,
Neutral on Ecolab
We currently have a Neutral recommendation on Ecolab, which carries
a short-term Zacks #4 Rank (Sell rating). St. Paul, Minnesota-based
Ecolab serves the food service, food and beverage processing,
healthcare, and hospitality markets both in the U.S. as well as
internationally. We are encouraged by Ecolab's consistent
performance of delivering double-digit earnings growth despite the
challenging business environment.
Ecolab continues to invest in strategic areas such health care,
food, water and energy and global pest elimination to expand its
business. Management is currently emphasizing on product
innovation, sales organization, volume growth, appropriate pricing,
and merger synergies along with rationalizing operating costs.
Moreover, Ecolab's growth has been buoyed by its strong
international presence, especially in the emerging markets like
Asia-Pacific and Latin America. Despite the impressive strong
international exposure, we remain cautious on Ecolab owing to the
aggressive competition from the likes of
Church & Dwight
). Raw material price inflation and higher delivered product cost
continue to be headwinds for the company.