Ecolab Declares Regular Dividend

The Board of Directors of Ecolab Inc. declared a regular quarterly cash dividend of $0.155 per common share, to be paid April 15, 2010, to shareholders of record at the close of business on March 9, 2010. Ecolab has paid cash dividends on its common stock for 73 consecutive years.

At the same time, the Board of Directors authorized the company to repurchase up to 10 million additional shares of Ecolab stock. As of December 31, 2009, Ecolab had approximately 2.7 million shares remaining under a previous repurchase authorization approved in October 2006. Ecolab had approximately 236.3 million shares outstanding on January 31, 2010.

Ecolab is currently trading at $45.54 with a price target of $50, representing about 10% additional upside. The dividend and share repurchase announcement reiterate some of the reasons why ECL was purchased.

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.

Eldorado-Sino Gold Merger Update

EGO is moving forward with its acquisition of Sino Gold. Sino shareholders approved the takeover on Thursday, 12/2 with almost unanimous consent. This deal creates a premier intermediate gold producerin China and Turkey with current production of 550,000 ounces/year from 4 different mines. Expected production growth by 2013 of beyond 1 million ounces. The transaction will increase EGO's share count from about 400 million shares to 535 million, which will increase its market cap almost 50%. Proven and probable reserves will go from 7,561 (000 oz Au) to 12,668 and revenue is expected to go from $518 million to $760 million.

This deal just increases the size and growth potential of EGO without having any adverse or beneficial effect on immediate EPS.

Gold got crushed today (12/4), down to $1,150 an ounce and EGO's price went down 3.45% to $13.43 with it. We're still positive on EGO and I am confident in owning it. If gold hits a temporary road block, UASBIG would have an opportunity to turn our EGO position into a full one at a much cheaper price.