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Estimates have been rising for Inter Parfums Inc. (IPAR - Snapshot Report) as the company continues to grow sales and expand its margins.

Based on the Zacks Consensus Estimate, analysts expect 10% EPS growth in 2010 and 14% growth in 2011. The company also pays a dividend that yields 1.5%. It is a Zacks #2 Rank (Buy) stock.

Company Description

Inter Parfums manufactures, markets and distributes perfumes and cosmetics. Together, co-founders Jean Madar and Philippe Benacin own nearly 50% of the company. The company is headquartered in New York City and has a market cap of $548 million.

Third Quarter Results

The company reported third quarter earnings per share of 28 cents, well ahead of the Zacks Consensus Estimate of 23 cents. It was a solid 17% increase over the same quarter in 2009.

Net sales were up a modest 2.8% year-over-year. At comparable foreign currency exchange rates, however, net sales rose 13%. With the exception of 2009, the company has grown its sales at double-digits rates every year since 2001 at an average rate of 17.0%.

The gross margin expanded in the quarter from 57.1% of sales to 59.0%. Operating income surged 19.2% as the company was able to leverage its fixed expenses.

Growth

Analysts estimates have been trending higher over the last several months, as seen in the company's Price & Consensus chart:

IPAR: Inter Parfums, Inc.

The company expects to earn 84 cents per share in 2010. The Zacks Consensus Estimate is slightly above guidance at 86 cents, representing 10% growth over 2009 EPS.

In 2011, the company expects to earn 96 cents per share. The Zacks Consensus Estimate is once again ahead of guidance at 98 cents. This equates to 14% EPS growth over 2011 estimates.

IPAR reports fourth quarter and full year 2010 results on March 9. It is a Zacks #2 Rank (Buy) stock.

Income

Inter Parfums pays a dividend that yields 1.5%. Since it began paying a dividend in 2002, the company has raised it 5 times at a compound annual rate of 26.4%.

Its payout ratio is relatively low at 29%, so expect more dividend hikes in the near future.

Valuation

Inter Parfums trades at 18.4x forward earnings, a premium to industry average of 15.6x. Its PEG ratio is a reasonable 1.4.

The stock's price to book ratio of 1.8 is lower than its peers at 2.9, however.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

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