Thursday, February 11, 2010

Ecolab improves 4Q earnings, but shares plummet

Despite posting higher profits in the fourth quarter of 2009, ECL shares sank over 5% Thursday as a result of slightly missing analyst estimates.

Ecolab had reported EPS of $0.48, which was below the street forecast of $0.56. This represents a 45% increase from the 4th quarter EPS in 08 of $0.33.

Ecolab reported a profit of $115.8 million, or 48 cents per share. That's up from $80 million, or 33 cents per share, in the last quarter of 2008. Excluding one-time items, the company said it earned 55 cents per share.

Revenue grew 5% to $1.56 billion in the quarter, which is identical to what analysts were expecting.

Going forward,in 2010, ECL said they expected to earn $2.17 and $2.25 per share while analysts were expecting $2.26. Management said they feel that demand is starting to bottom, which is a good sign.

Here at UASBIG, we feel that Ecolab is still a hold because of their unique and diversified business.

I will update the model shortly and blog about any changes to my price target.

1 comment:

UASBIG said...

I have updated the model for Ecolab with their most recent information regarding their 4Q and FY 09 numbers.

Revenues and Margins took a small hit in 2009, but 2010 looks to be a year of recovery since demand appears to have bottomed. The valuation remains unchanged, with a price target of $50 on Ecolab. UASBIG remains HOLD on ECL.