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Ecolab Attains 52-Week High - Analyst Blog
11/30/2012 10:40:00 AM
Shares of Ecolab Inc. ( ECL ) reached a 52-week high of $72.00 on Thursday, November 29, 2012. The closing price of this dental equipment stock as of September 28, 2012 was $71.81, which represented a solid year-over-year return of 31.2%.
Several factors such as the company's solid third quarter results, the recent acquisition of Champions Technologies, the divestment of Vehicle Care and new product launches are driving the stock.
On October 30, 2012, Ecolab reported adjusted earnings per share of 87 cents, representing a 16% jump from the year-ago earnings of 75 cents per share. Despite the restructuring and integration expenses related to the Nalco merger, profit attributable to Ecolab in the reported quarter climbed 54% year over year to $238 million (or 80 cents per share).
On a fixed currency basis, revenues grew 7% in comparison with the year-ago pro forma fixed currency sales (inclusive of the Nalco operations). Growth was triggered by higher sales from Global Energy, Healthcare, Latin America and worldwide Kay as well as the Pest Elimination franchises.
Moreover, in an effort to expand its Global Energy Services franchise, Ecolab agreed to acquire privately-owned Champion Technologies and its related company Corsicana Technologies for $2.2 billion, in cash and stock. This is Ecolab's biggest acquisition since the company acquired Nalco in 2011.
The acquisition of Champion Technologies is likely to
strengthen Ecolab's market position and help the company benefit
from one of the fastest growing industries in the U.S. Following
the closure, the company is slated to become a giant in the
oilfield chemical business.
For fiscal 2013, the Zacks Consensus Estimate rose by 2.3% over the last 60 days to $3.59 per share, implying year-over-year growth of 20.31%.
The company currently trades at a forward P/E of 24.1x, a 55.5% premium to the peer group average of 15.50x. The price-to-book ratio of 3.50x represents a 12.5% premium to the peer group average of 3.11x. Given Ecolab's strong business fundamentals, the premium is justified.
Ecolab has a trailing 12-month ROE of 13.5% compared with the peer group average of 18.0%.
About the Company
St. Paul, Minnesota-based Ecolab serves the food service, food
and beverage processing, healthcare, energy, water treatment and
hospitality markets both in the U.S. as well as internationally.
The company continues to invest in strategic areas such as health
care, food, water and energy and global pest elimination to
expand its business.
We currently have a 'Neutral' recommendation on Ecolab. The
stock carries a short-term Zacks #3 Rank (Hold rating).
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