On Jun 11, we retained
) at Neutral, following moderate first-quarter results. Although
the company was able to maintain double-digit bottom-line growth,
difficult macroeconomic trends are pressurizing the top line.
AMER VANGUARD (AVD): Free Stock Analysis
ECOLAB INC (ECL): Free Stock Analysis Report
MINERAL TECH (MTX): Free Stock Analysis
OM GROUP INC (OMG): Free Stock Analysis
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Why the Retention?
On Apr 30, Ecolab posted adjusted earnings per share of 60 cents
for the first quarter of 2013, which exceeded the Zacks Consensus
Estimate by 2 cents. This result represented a 20% jump from the
year-ago earnings of 50 cents per share.
Revenues on a reported and fixed currency basis grew 2% year over
year to $2,872.1 million for the quarter. Excluding acquisitions
and divestitures, adjusted fixed currency revenues increased 3%.
However, revenues missed the Zacks Consensus Estimate of $2,925
million by 1.8%. Strong gains in Latin America and Asia-Pacific
were partially offset by sluggish growth in North America and
The company's earnings managed to beat the Zacks Consensus
Estimate in 1 out of the last 4 quarters. However, it managed to
meet the estimates in the rest of the quarters leading to an
average surprise of 3.45%. Over the last 60 days, the Zacks
Consensus Estimate for 2013 inched down by 0.3% to $3.51 per
share but increased by 7.3% to $4.15 per share for 2014. This
also implies that the firms still hold similar views on the
We are impressed by Ecolab's consistent delivery of double-digit
earnings growth despite the current challenging business
environment. Ecolab finally managed to successfully complete the
pending Champions acquisition in the first quarter. The
acquisition should boost the company's Energy business.
Additionally, the company is aggressively streamlining its
business units to enhance margins and profitability.
Though multiple acquisitions have expanded Ecolab's product
range, we remain concerned about the acquisition and
integration-related risks. Difficult economic trends, currency
fluctuations, higher raw material prices, product delivery costs
and pension costs also remain headwinds.
Other Stocks to Consider
Ecolab currently has a Zacks Rank #3 (Hold). Other companies from
the basic materials sector such as
American Vanguard Corp.
OM Group Inc.
Minerals Technologies Inc.
) warrant a look. While AVD and OMG are Zacks Rank #1 (Strong
Buy) stocks, MTX carries a Zacks Rank #2 (Buy).