ECL : NYSE : US$104.83
Based in St. Paul, Minnesota, Ecolab is a leading
international provider of advanced technologies and
services helping to optimize the use of resources such as
water, energy, food and the environment.
Transportation and Industrials — Industrial Technologies
EXECUTION STAYS STRONG; Q1
RESULTS; MAINTAIN BUY, $120 TGT
We find Ecolab very well positioned to benefit from the convergence of
population growth, resource volatility and rapid industrialization across
the world. The company’s recurring services model drives high visibility
(even in an uncertain macro environment), along with an impressive
expansion into Energy. Maintain BUY.
Merger synergies and European margin enhancement efforts are
tracking to plan (with several significant wins this quarter), while
Energy continues to shine (strong new business activity supports
better organic growth in H2/14). Next catalyst with booth tour at
upcoming restaurant show in Chicago (5/19).
Expansion of the 3D TRASAR platform into industrial looks to gain
momentum moving through the year (CIP, solids, etc.), representing
a nice potential upsell opportunity for existing accounts (as new
product focus continues to help drive share gains and mitigate
inflation). ‘14E guidance gets reiterated at $4.10-$4.20, with Q2
targeted at ~$1.00-$1.04 (16-21% growth vs. tough comparison).
Our ’14 estimates adjust to reflect results, with F2014 going to
$14.5B/$4.20 from $14.5B/$4.18; F2015 stays at $15.5B/$4.83.
Our 12 month target of $120 equates to an EV/EBITDA multiple of
~13.6x our 2015 estimate.
Global macroeconomic conditions, seasonal sales patterns, commodity
costs, competition, regulatory dynamics and M&A integration.