December 22, 2008 - Ecolab Inc. (ECL-NYSE) develops and markets products and services for the hospitality, foodservice, healthcare, and light industrial markets in the United States and internationally. The company offers cleaning and sanitizing products and programs, as well as pest elimination, maintenance, and repair services primarily to hotels and restaurants, healthcare and educational facilities, quick service units, grocery stores, commercial and institutional laundries, light industry, dairy plants and farms, food and beverage processors, and the vehicle wash industry.

The company provides general purpose hard surface cleaners, degreasers, sanitizers, polishes, hand care products, and assorted cleaning tools; lubricants and animal health products, as well as cleaning systems, electronic dispensers, and chemical injectors for the application of chemical products; antimicrobial products used in direct contact with meat, poultry, seafood, and produce; process control systems and facility cleaning systems; infection prevention/healthcare products; vehicle appearance products, including soaps, polishes, sealants, wheel and tire treatments, and airfresheners; and water and wastewater treatment products, services, and systems for commercial/institutional customers.

In addition, it offers services for the detection, elimination, and prevention of pests; and commercial cooking and refrigeration equipment repair and maintenance services. Ecolab, Inc. was founded in 1923 and is headquartered in St.Paul, Minnesota.

There's money in messes, at least in cleaning them up. Since 2001, the company increased earnings, going from $ .73 a share back then to $1.66 in 2007. It had a string of increasing earnings going back to 1992 to 2000, taking the earnings per share from 26 cents to 75 cents over that period. This year, analysts predict $1.86 and $2.00 for 2009. Earnings for the fourth quarter are estimated at 45 cents, up from 40 cents last year in the same period. For the first quarter of '09, look for 42 cents, up from 39 cents in 2008's first quarter.

Ecolab is increasing sales in most countries, including the U.S.. Brazil, Chile and Mexico are buying lots of products along with China, Australia, and New Zealand. But things aren't going as well in Europe, particularly in France and Italy. Also, raw material prices have risen and the currency translations have worked against the company's bottom line. Even with those negatives, earnings should be up 11% this year.

Recently the German company Henkel sold its holdings in Ecolab, amounting to almost 30% of the stock at a price of $30.50 a share, about $2.2 billion worth. Most of that stock found new homes but Ecolab purchased $300 million worth, lowering the float (which will bump up eps as well). The sale by Henkel takes them out of management's decision making, giving better flexibility to the company.

Another positive: governments are getting more concerned about disease outbreaks and regulating new rules for cleanliness to fight them. Ecolab is in a unique position to help companies comply with the new laws. Furthermore, ECL has new products and operating efficiencies that will improve sales and margins.

More numbers: Market Cap is $8.9 billion. Trailing P/E is 18.77 with a Forward P/E of 18. Price to Book is 3.93. Operating margin for the last 12 months was 12% with a Profit margin of 7.9%. Return on Equity was a stellar 24.48%. There's $102 million in cash, making for 41 cents a share. Total shares outstanding are 247.836 million. Insiders own 12.5% of the stock. Institutions have 59%. The dividend is 56 cents a share per year, giving a yield of 1.6%. Current ratio is 1.4.

ECL has a bright future in a world where most companies are fighting for survival. With new government regulations for cleanliness, ECL has an opportunity to expand its customer base as well as increase its market penetration. This is a stock worth most investors' time for further analysis.

Company Web site: www.ecolab.com

- Ted Allrich