Can Global Industrial Unit Drive Ecolab's (ECL) Q3 Earnings?

Ecolab Inc. (NYSE:ECL) is scheduled to report third-quarter 2019 results on Oct 29, before market opens. The company’s core Global Industrial unit is expected to have contributed significantly in the quarter despite foreign exchange headwinds.

Ecolab delivered a positive earnings surprise of 0.7% in the last reported quarter, the average of the trailing four quarters being a positive 0.1%.

Which Way Are Q3 Estimates Treading?

For the to-be-reported quarter, the Zacks Consensus Estimate for revenues is pegged at $3.89 billion, suggesting an improvement of 3.7% from a year ago. The same for earnings is at $1.72, indicating an increase of 12.4%.

Let’s delve deeper.

Ecolab Inc. Price and EPS Surprise

Ecolab Inc. price-eps-surprise | Ecolab Inc. Quote

Global Industrial Likely to Drive Q3

The Global Industrial segment has likely gained from the Water, Food & Beverage and Life Sciences sub-units in the third quarter. Not to forget, the segment accounted for 36.7% of net sales in the last reported quarter.

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

For instance, Ecolab’s subsidiary Nalco Water has unveiled LegionGuard LG25, which is designed to lower the waterborne pathogen Legionella pneumophila in drinking water systems.

Additionally, Nalco opened a customer experience center at its production plant to demonstrate the company’s technologies. This is expected to have broadened Ecolab’s customer base.

Reflective of these, the Zacks Consensus Estimate for the segment’s third-quarter earnings is pegged at $1.46 billion, suggesting a year-over-year increase of 3.6%.

Other Factors at Work

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

The consensus for revenues is pinned at $1.37 billion, indicating a rise of 1.9% from the year-ago quarter.

Coming to the Global Energy unit, the Zacks Consensus Estimate for third-quarter revenues stands at $890 million, remaining flat on a year-over-year basis.

Notably, lucrative acquisitions in the Global Institutional arm are expected to have driven performance in the quarter to be reported. Management is optimistic about the Chemstar Corporation buyout, which is expected to have boosted the company’s Food & Beverage unit.

That’s not all. Ecolab has expanded its offerings in the healthcare information technology space. The company has added digital dashboards, which will provide greater visibility, measurement and analysis of current practices, including predictive analytics to help forecast and reduce infection rates. This is expected to have driven Ecolab’s Healthcare business.

Reflective of these, Ecolab expects its third-quarter earnings per share within $1.65-$1.75, indicating a year-over-year improvement of 8-14%.

Adjusted gross margin is expected to be 42-43%.

However, management at Ecolab expects foreign currency translation to have an unfavorable impact of 11 cents on the third-quarter 2019 earnings results.

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. You can see the complete list of today’s Zacks #1 Rank stocks here.

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 quarter.

Edward Lifesciences Corporation (NYSE:EW) has an Earnings ESP of +0.35% and a Zacks Rank #3.

AmerisourceBergen Corporation (NYSE:ABC) has an Earnings ESP of +0.55% and a Zacks Rank #3.

Cardinal Health, Inc. (NYSE:CAH) has an Earnings ESP of +1.50% and a Zacks Rank #3.

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