The so-called graying of America opens possibilities for many industries. Certainly, companies that are involved in the cleaning and maintenance of hospitals and healthcare facilities and its suppliers will be able to benefit from this trend. Today, 24% of the American population’s age is 50 and over, and this percentage is expected to increase in the future.
Let’s analyze three companies involved in these services.
Good quarter results and stronger position
Ecolab Inc. (NYSE:ECL) sells products and services for the hospitality, healthcare, foodservice, and industrial markets.
The company’s first-quarter experienced a 20% increase in its earnings of $0.60 per share.
Revenue increased 2% to $2.87 billion year-over-year powered by global food & beverage and global specialty sales’ growth. North America and Europe remain sluggish, but Latin America and Asia Pacific are showing strong gains for the company. The bottom line was benefited by an improved operating margin coupled with lower interest expense and a lower tax rate.
In order to expand its business, the company continues to invest in strategic areas such as food, water, healthcare, energy, and global pest elimination. The Champion Technologies acquisition for $2.3 billion will complement the company’s energy business, which is under restructuring. Cost synergies will be $25 million this year and management expects to reach $150 million annually by 2015.
The company operates in 72 countries outside of the U.S. Its overseas presence boosts sales and it is driving growth. I believe this will continue as long as the emerging markets continue to grow. Ecolab Inc. (NYSE:ECL) recently bought Mexico-based Quimiproductos with the intention of building a stronger presence in LatAm. Despite the region’s high natality, its population is aging as well.
The only risks I see in this company are acquisition and integration-related. Ecolab Inc. (NYSE:ECL)’s operations are big and its continued expansion could make it face some financial difficulties in some business units which should be taken into account.
A solid company to consider
Healthcare Services Group, Inc. (NASDAQ:HCSG) manages and provides administrative and operating services to the healthcare industry’s facilities throughout the United States.
Revenues for the company have increased over 5% year over year, reaching $273 million for its first quarter 2013. Net income rose 74% to almost $15 million, which allowed a cash dividend of $0.16 per share.