) achieved a new 52-week high of $95.42 on Sep 10, closing at
$95.39 on the same date. The closing price of this leading
cleaning and sanitation products maker represented an outstanding
one-year return of 50.4% and year-to-date return of 29.1%.
Average volume of shares traded over the last 3 months came in at
approximately 1,012K. Currently, the stock trades at a forward
P/E of 27.0x, higher than its peer group of 21.45x.
The company's promising second quarter results, along with raised
guidance for 2013, sparked investor confidence on the stock.
Moreover, a number of recent initiatives to streamline its
underlying business, a new research and development (R&D)
center in Russia, along with launch of new products in the
market, bode well for the company.
Ecolab posted favorable second quarter results with adjusted
earnings of 86 cents per share, which beat the Zacks Consensus
Estimate of 84 cents by 2.38%, and the year-ago earnings of 72
cents by 19%. Revenues grew 13% to $3,337.8 million, a record
high for the company.
Moreover, ECL raised its guidance for 2013, which includes the
impact of the acquisition of Champion Technologies. It
anticipates 2013 higher adjusted EPS in a range of $3.48−$3.56,
compared with the earlier range of $3.45−$3.55, representing a
17%−19% (earlier 16%-19%) rise in earnings.
Further, the company's aggressive strategy to pursue acquisitions
along with its ability to divest non-core, underperforming assets
(such as a section of its Mobotec business divested to UK-based
The Power Industrial Group), intensifies its focus on profitable
niches. In addition, acquired businesses like Champions and
Purate complement its diversified product portfolio.
Recently, Ecolab revealed that its Russian arm, Master Chemicals
Nalco Champion, a chemical solutions and technologies provider,
has opened a 21,500 square-feet large R&D center and regional
headquarters in Kazan, Tatarsta. Currently, Kazan is the heart of
Russia's oil and gas industry. The R&D facility's 4,000
square feet of laboratory space will be utilized for oilfield
chemical research and development of chemical solutions for other
industries in Russia.
Moving ahead, recently launched products such as the Kay Super
Contact Cleaner for the quick service restaurant (QSR) chains,
and the Advantis FC Cleaning Program for reduced temperature
foam-cleaning in food and protein processing, are expected to
drive top-line growth. New account wins, together with increased
penetration into emerging markets, are other positive factors
boosting investor confidence.
Other Stocks to Consider
Ecolab carries a Zacks Rank #3 (Hold). Some companies from the
basic materials sector such as
Sensient Technologies Corporation
) are expected to do well. All these stocks carry a Zacks Rank #2
ECOLAB INC (ECL): Free Stock Analysis Report
FERRO CORP (FOE): Free Stock Analysis Report
MINERAL TECH (MTX): Free Stock Analysis
SENSIENT TECH (SXT): Free Stock Analysis
To read this article on Zacks.com click here.