Results: Ecolab Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Investors in Ecolab Inc. (NYSE:ECL) had a good week, as its shares rose 3.2% to close at US$227 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$3.8b were in line with what the analysts predicted, Ecolab surprised by delivering a statutory profit of US$1.43 per share, a notable 11% above expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Ecolab

Taking into account the latest results, the consensus forecast from Ecolab's 22 analysts is for revenues of US$16.0b in 2024. This reflects a credible 3.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 22% to US$6.59. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$16.0b and earnings per share (EPS) of US$6.29 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$237, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Ecolab at US$269 per share, while the most bearish prices it at US$180. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Ecolab'shistorical trends, as the 4.2% annualised revenue growth to the end of 2024 is roughly in line with the 3.8% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 4.8% annually. It's clear that while Ecolab's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ecolab following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$237, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Ecolab. Long-term earnings power is much more important than next year's profits. We have forecasts for Ecolab going out to 2026, and you can see them free on our platform here.

Even so, be aware that Ecolab is showing 1 warning sign in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.