Ecolab (ECL): What's in the Cards this Earnings Season?

St. Paul, MN-based Ecolab Inc.ECL , a leading provider of water, hygiene and energy technologies and services, is expected to report fourth-quarter 2016 results on Feb 21.

Last quarter, the company reported earnings of $1.22 per share, which missed the Zacks Consensus Estimate of $1.24. Meanwhile, over the last four trailing quarters, the company posted an average earnings beat of 0.13%.

Stock Performance

A glimpse at the price performance of the stock over the past three months reveals a modest return of around 4.9%. This compares unfavorably with the Zacks classified Chemical - Specialty sub-industry's gain of around 10.4%. The stock's current return is also lower than the S&P 500's return of roughly 22.8% over the same time.

However, despite the slightly unfavorable price trend, with a long-term expected earnings growth rate of 13.4%, the stock has solid potential for appreciation.

Estimate Revision Trend

Meanwhile, the company has seen a disappointing estimate trend with respect to earnings.

Estimates for both the current quarter and full year have been revised downward over the past two months, with no movement in the opposite direction. Despite the downward revisions, the Zacks Consensus Estimate remained stable at $1.28 and $4.41 for current quarter and full-year earnings, respectively, over the same time frame.

Let's see how things are shaping up prior to this quarter.

Factors at Play

Ecolab's earnings growth despite the challenging business environment raises optimism over the stock. Additionally, the company's large base of recurring revenues, industry-leading technologies and excellent field service are significant propellers.

We are also upbeat about the acquisition of Abednego Environmental Services. Notably, Abednego will be part of Ecolab's Nalco Water business operations. Nalco is the worldwide leader in sustainability services and integrated water treatment solutions (read more: Ecolab Acquires Abednego Environmental, Shares Gain ).

However, on the flip side, Ecolab slashed its full-year guidance for adjusted earnings. The company now expects earnings per share in the range of $4.35 to $4.45, compared to the previously issued band of $4.35 to $4.50.

Ecolab Inc. Price and EPS Surprise

Ecolab Inc. Price and EPS Surprise | Ecolab Inc. Quote

Per management, unfavorable foreign currency and the impact of Venezuelan deconsolidation are expected to hurt earnings by 30 cents. For the fourth quarter, the company expects foreign exchange headwinds to impact earnings by approximately 2 cents per share.

Earnings Whispers

Our quantitative model doesn't conclusively point to an earnings beat this quarter for the stock.

That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Ecolab is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.28. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Ecolab carries a Zacks Rank #4. Please note that we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision.

Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

DaVita HealthCare Partners Inc. DVA has an Earnings ESP of +4.40% and a Zacks Rank #3. Additionally, on an average, the stock represented a positive surprise of almost 3.77% in the last four trailing quarters.

The Cooper Companies COO has an Earnings ESP of +2.69% and a Zacks Rank #2. The stock represented a positive surprise of almost 6.32% in the last four trailing quarters. You can see the complete list of today's Zacks #1 Rank stocks here .

Exilixis, Inc. EXEL has an Earnings ESP of +200% and a Zacks Rank #2. The stock posted a positive earnings surprise of 107.69% in the last reported quarter.

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Ecolab Inc. (ECL): Free Stock Analysis Report

Exelixis, Inc. (EXEL): Free Stock Analysis Report

DaVita HealthCare Partners Inc. (DVA): Free Stock Analysis Report

Cooper Companies, Inc. (The) (COO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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