Ecolab Focuses On Pest Elimination, Acquires 3 Companies

Ecolab Inc. (NYSE:ECL) recently announced the acquisition of three U.S. pest services companies that provide specialized capabilities in food storage. The transactions are worth $36 million and were closed on Dec 1.

The acquired companies are Food Protection Services LLC, Royal Pest Solutions, Inc. and Research Fumigation Company, LLC. The latest development expands Ecolab’s pest elimination solutions for the food and beverage industry.

Food Protection operates in the Pacific Northwest, Great Lakes, Midwest and the Mississippi Delta. Royal Pest Solutions functions in the Mid-Atlantic region from New Jersey to South Carolina. Research Fumigation Company serves the Gulf Coast states of Texas, Louisiana, Mississippi, Alabama and Florida.

The acquisitions are expected to boost Ecolab’s offerings in the food and beverage markets by strengthening the Global Services and Specialty business segment. Other terms of the deals have been kept under wraps.

Acquisitions to Boost Growth

Ecolab continues to focus on investment in key growth businesses and bolt-on acquisitions to gain market traction and boost profits and inorganic growth.

In September, the company signed an agreement to acquire the paper chemicals business of Georgia-Pacific. The deal will enhance Ecolab’s position in the growing Tissue and Towel, as well as the Packaging and Board segments of the paper industry.

Earlier, Ecolab, Trucost and Microsoft (NASDAQ:MSFT) had initiated a strategic collaboration to introduce Water Risk Monetizer, the industry’s first publicly available financial modeling tool that allows businesses to understand the impact of water risks (sustainability of water).

Of the other notable tie-ups in the recent past, Ecolab took over Jianghai Environmental Protection Co. Ltd., an industrial water treatment company headquartered in Changzhou, China.

Shares Shine Bright

Year to date, Ecolab has returned almost 18.1%, higher than the broader industry’s 15.9%. The company continues to see improvement in underlying sales volume and pricing across most business segments.

A solid portfolio, product launches and expanding customer base should drive organic sales while the realization of targeted synergies associated with acquisitions should drive margins. Furthermore, solid performance by the Global Institutional segment is encouraging. Sales increased 6.6% to $1.22 billion at the segment in the last quarter, led by strong growth in the Specialty and Healthcare business lines.

Zacks Rank & Key Picks

Ecolab has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical sector are PetMed Express (NASDAQ:PETS) , Luminex Corporation (NASDAQ:LMNX) and IDEXX Laboratories (NASDAQ:IDXX) .

Notably, PetMed Express sports a Zacks Rank #1 (Strong Buy). The company has a long-term expected earnings growth rate of 10%. You can see the complete list of today’s Zacks #1 Rank stocks here

Luminex yielded a return of 6.4% over the last year. The stock has a Zacks Rank #1.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has climbed 39.2% over a year’s time and has a Zacks Rank #2 (Buy).

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