16. Ecolab Inc. (NYSE:ECL)
Consensus Long-Term EPS Growth Estimate: 15%
Number of Hedge Fund Holders: 42
Ecolab Inc. (NYSE:ECL) is one of the biggest chemicals companies in America. The firm caters to the cleaning, sanitation, and infection prevention needs of industrial, healthcare, mining, food, manufacturing, and other companies. With a fortress balance sheet as evidenced by $3 billion in receivables and trailing twelve-month revenue of $15.6 billion, Ecolab Inc. (NYSE:ECL) enjoys a vast market presence. Yet, its reliance on industrial output makes robust economic output a precondition for financial prosperity. With US manufacturing activity being subdued for most of the past 12 months, a resurgence could bode well for Ecolab Inc. (NYSE:ECL). The pent-up potential was evident after the firm’s third quarter results which saw its global industrial segment grow revenue to $1.99 billion from the year-ago quarter’s $1.94 billion. Ecolab Inc. (NYSE:ECL) has also set a mid-term operating margin goal of 20%, and this, along with broader economic recovery should drive its hypothesis moving forward.
Ecolab Inc. (NYSE:ECL)’s management shared details about its growth plans during the Q3 2024 earnings call. Here is what they said:
“Now I’d like to transition our attention from Q3 to what our teams are focused on to fuel long-term growth and margin expansion. Our growth engines in clean tech, high tech and biotech are showing strength and momentum, even if each are at the different stage of development.
In the clintech area, institutional and specialty as well as pest elimination are both delivering strong performance, growing 7% and 8%, respectively, with operating income margins north of 20%. Global High Tech, which includes data center cooling and water for microelectronics is growing at strong double digits. And in biotech, our Life Sciences business remains ahead of the curve in what we believe will be a huge long-term growth opportunity. Our innovation pipeline also continues to build as we shift our focus from renovation to breakthrough innovation. With nearly $1.5 billion, our 2024 pipeline is at record levels and laser-focused on the biggest opportunities across our clean tech, high tech and biotech platforms. Finally, our One Ecolab growth initiative, which seeks to leverage our digital technologies to deliver best-in-class business outcomes, operational performance and environmental impact that every customer location around the world is progressing very well.
Over the next few years, One Ecolab looks to more quickly unlock our current $55 billion penetration opportunity. Our early focus on our largest and fastest-growing certified customers is showing promising results with significant total value delivered for our customers and a great growth opportunity for Ecolab. With strong long-term business momentum, record free cash flow and the proceeds from the sale of the Surgical Drapes business, our balance sheet is in a very healthy position. This provides us with many options to allocate capital to organic and inorganic growth opportunities. On organic growth, we are well positioned to scale unique customer solutions like our AI dish machine program for QSR and circular water systems for data centers and microelectronic manufacturers.”
