We have reiterated our Neutral recommendation on
) with a price target of $76.0.
Its third quarter 2012 adjusted earnings per share of 87 cents
were in line with the Zacks Consensus Estimate. On a fixed
currency basis, revenues grew 7% to $3,023.3 million compared
with the year-ago pro forma fixed currency sales (inclusive of
the Nalco operations). However, revenues were lower than the
Zacks Consensus Estimate of $3,086 million.
Revenue growth in the reported quarter was triggered by higher
sales from Global Energy, Healthcare, and worldwide Kay as well
as the Pest Elimination franchises. Latin America represents key
growth area for the company's overseas operation.
The St. Paul, Minnesota-based company is a leading provider of
cleaning, sanitizing, food safety and infection prevention
products and services. The company serves the foodservice, food
and beverage processing, healthcare, and hospitality markets in
the U.S. as well as internationally.
Ecolab expects to improve margins from ongoing restructuring
initiatives and synergies from the ongoing Nalco integration
process. Further, the company remains committed toward delivery
of incremental returns to investors leveraging a solid balance
sheet, healthy cash flow and earnings stability.
Ecolab is active on the acquisition front and continues to
explore opportunities to expand into high-growth markets. The
decision to acquire Champion within a year of the Nalco
acquisition strengthens the company's energy business in North
America. Following the closure, the company is slated to become a
giant in the oilfield chemical business.
Even though the company has completed multiple acquisitions
over the past few years, back-to-back acquisitions pose
substantial integration risks. Difficult economic trends,
currency fluctuations along with higher raw material prices and
delivered product costs remain additional headwinds.
In addition, Ecolab operates in highly competitive markets and
hence we remain cautious about the aggressive competition from
Church & Dwight
Ecolab currently has a short-term Zacks #3 Rank (Hold
CHURCH & DWIGHT (CHD): Free Stock Analysis
CLOROX CO (CLX): Free Stock Analysis Report
ECOLAB INC (ECL): Free Stock Analysis Report
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