Trade-Ideas: Ecolab (ECL) Is Today's "Barbarian At The Gate" Stock

Trade-Ideas LLC identified Ecolab (ECL) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Ecolab

(

ECL

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ecolab as such a stock due to the following factors:

  • ECL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $194.0 million.
  • ECL has traded 793,608 shares today.
  • ECL traded in a range 225.4% of the normal price range with a price range of $4.89.
  • ECL traded above its daily resistance level (quality: 529 days, meaning that the stock is crossing a resistance level set by the last 529 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on ECL:

Ecolab Inc. provides water, hygiene, and energy technologies and services for customers worldwide. The company operates in four segments: Global Industrial, Global Institutional, Global Energy, and Other. The stock currently has a dividend yield of 1.1%. ECL has a PE ratio of 3. Currently there are 9 analysts that rate Ecolab a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Ecolab has been 1.4 million shares per day over the past 30 days. Ecolab has a market cap of $35.5 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.90 and a short float of 3.6% with 5.99 days to cover. Shares are up 12.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ecolab as a

buy

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 65.07% to $524.10 million when compared to the same quarter last year. In addition, ECOLAB INC has also vastly surpassed the industry average cash flow growth rate of 1.16%.
  • ECOLAB INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ECOLAB INC increased its bottom line by earning $3.93 versus $3.15 in the prior year. This year, the market expects an improvement in earnings ($4.51 versus $3.93).
  • The gross profit margin for ECOLAB INC is rather high; currently it is at 53.41%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.91% trails the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, ECOLAB INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Despite the weak revenue results, ECL has outperformed against the industry average of 19.1%. Since the same quarter one year prior, revenues slightly dropped by 5.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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