Why Food Safety Company Ecolab Shares Are Surging Today

Ecolab Inc ECL shares are trading higher after the company reported better-than-expected fourth-quarter FY23 results and issued first-quarter FY24 adjusted EPS guidance above estimates.

Sales grew 7% Y/Y to $3.938 billion, marginally beating the analyst consensus estimate of $3.933 billion.

Sales from Global Industrial rose 3%, Global Institutional & Specialty climbed 13%, and Global Healthcare & Life Sciences fell 1% Y/Y in fixed currency.

Selling, general and administrative expenses rose 12% Y/Y. Adjusted operating income increased 24% Y/Y to $624.5 million, and the operating margin expanded to 15.9% from 13.9% a year ago.

Adjusted EPS of $1.55 beat the consensus estimate of $1.54.

The company held $919.5 million in cash and cash equivalents as of December 31, 2023.

Outlook: Ecolab expects first-quarter FY24 adjusted EPS of $1.27-$1.37 versus the consensus of $1.12.

The company expects FY24 adjusted EPS of $6.10-$6.50 vs. an estimate of $6.14, assuming soft but stable macroeconomic demand and lower delivered product costs in the first half of the year as global inflation eases. 

Christophe Beck, chairman and chief executive officer, said, “We are confident 2024 will be another strong year for Ecolab, continuing our long-term 12-15% earnings growth trajectory that is amplified by shorter-term benefits from moderately lower delivered product costs.”

“We expect another very strong year of operating margin expansion, building upon our success in 2023, and remain confident in our path to deliver on our 20% margin objective over the next few years to drive superior earnings growth and long-term returns for shareholders.”

Also Read: Chemical Sector Outlook: Ecolab, Linde, and Sherwin-Williams Downgraded Amid Market Shifts

Price Action: ECL shares are up 8.41% at $220.05 on the last check Tuesday.