Global Industrial Unit To Drive Ecolab's (ECL) Q4 Earnings

Ecolab Inc. (NYSE:ECL) is scheduled to report fourth-quarter 2019 results on Feb 18, before market open. The company’s core Global Industrial unit is expected to have contributed significantly in the quarter despite foreign exchange headwinds.

Ecolab reported a negative earnings surprise of 0.6% in the last reported quarter, the trailing four-quarter positive surprise being 0.3%, on average.

Q4 Estimates Picture

For the to-be-reported quarter, the Zacks Consensus Estimate for revenues is pegged at $3.87 billion, suggesting an improvement of 3% from a year ago. The same for adjusted earnings per share (EPS) is at $1.68, indicating an increase of 9.1%.

Let’s delve deeper.

Global Industrial Likely to Drive Q4

The Global Industrial segment is likely to have gained from the Water, Food & Beverage and Life Sciences sub-units in the fourth quarter.

It is encouraging to note that positive developments are expected to have boosted the Global Industrial arm.

Notably, Ecolab’s Nalco Water recently opened a customer experience center at its production plant. Notably, the company aims to demonstrate how the company’s technologies can reduce water use and optimize costs. Also, Nalco Water’s new LegionGuard LG25 is expected to have contributed to the segment’s quarterly show.

That’s not all. The Food & Beverage sub unit is also expected to have driven the segment.

The company’s Chemstar buyout has integrated the coveted product, Sterilox Fresh into Ecolab’s already broad product spectrum. Sterilox Fresh, which produces treatment solutions to help the food retail industry, is expected to have witnessed robust demand in the quarter.

Notably, management sees solid growth prospects in the food retail industry for the quarter to be reported and beyond.

Reflective of these, the Zacks Consensus Estimate for the segment’s fourth-quarter earnings is pegged at $1.48 billion, suggesting a year-over-year increase of 1%.

Other Factors at Work

The company’s Global Institutional unit is expected to have seen a solid quarter.

The consensus for revenues is pinned at $1.35 billion, indicating a rise of 1.5% from the year-ago quarter.

The Healthcare sub-unit, which has seen positive developments of late, is expected to have driven the Global Institutional segment. Notably, management is optimistic about the acquisition of Gallay Medical & Scientific, which is expected to have broadened Ecolab’s healthcare and acute care offerings.

The company’s enhanced healthcare offerings include the next generation of open basin fluid warming systems — the CoreTemp Fluid Management System. This is also expected to have ramped up sales from the digital technology markets.

Coming to the Global Energy unit, the Zacks Consensus Estimate for fourth-quarter revenues stands at $882 million, reflecting a year-over-year decline of 3.2%.

Per management, the decline might have resulted from challenging industry landscape.

Management at Ecolab has been optimistic about the ongoing spin-off of Ecolab’s upstream energy business, which was expected to positively impact full-year adjusted EPS by 10-14% to a range of $5.80-$6.

However, for 2019, Ecolab expects adjusted EPS within $5.80-$5.90, calling for 10-12% growth over 2018.

For the fourth quarter of 2019, Ecolab expects adjusted EPS within $1.64-$1.74, mirroring year-over-year growth of 6-13%.

Further, foreign currency translation is expected to have had a 13-cent unfavorable impact on adjusted EPS in the quarter to be reported and a 2-cent unfavorable impact on full-year EPS.

Earnings Whispers

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. This is not the case here as you will see below.

Earnings ESP: Ecolab has an Earnings ESP of 0.00%. 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 #3.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this time around.

DexCom (NASDAQ:DXCM) has an Earnings ESP of +12.27% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

HealthEquity (NASDAQ:HQY) has an Earnings ESP of +18.56% and a Zacks Rank #3.

Nevro Corp. (NYSE:NVRO) has an Earnings ESP of +3.45% and a Zacks Rank #3.

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