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International Flavors (IFF) Q1 Earnings: What's in Store?

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International Flavors & Fragrances Inc. (IFF - Free Report) is scheduled to report first-quarter 2017 results on May 8, after market close.

Over the last three months, the company’s shares yielded 18.09% return, outperforming the gain of 4.90% recorded by the Zacks categorized Chemicals Specialty industry.

Also, International Flavors & Fragrances’ financial results in the last four quarters were impressive, with better-than-expected results in three. Average earnings surprise was a positive 2.18%. Let us see how things are shaping up for the company prior to this announcement.

Factors to Affect Q1 Results

International Flavors & Fragrances is constantly attempting to expand its business in emerging nations. It is also investing in the research and development of new and innovative compounds. We believe such growth policies bode well for the company in the to-be reported quarter and ahead. Also, its inorganic initiatives, including acquired assets of David Michael & Company in Oct 2016 and Fragrance Resources in Jan 2017, will boost the company’s revenue generation capabilities and thus, prove accretive to earnings.

Also, the company’s multi-year productivity program will enable it to check costs, make strategic investments and expand businesses globally. However, it will incur approximately $10 million in pre-tax charges related to these programs in the first quarter.

Despite these positives, International Flavors & Fragrances is exposed to risks arising from adverse currency movements and stiff competition. Also, its operations are highly sensitive to economic conditions in the global arena, which might affect consumer spending leading to a change in customer order pattern.

Earnings Whispers

Our proven model does not conclusively show that International Flavors & Fragrances will be able to pull an earnings surprise this quarter. The stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

This is not the case with International Flavors & Fragrances as you will see below.

Zacks ESP: International Flavors & Fragrances currently has an Earnings ESP of 0.00%, with both the Most Accurate estimate and the Zacks Consensus Estimate pegged at $1.53.

Zacks Rank: International Flavors & Fragrances currently carries a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive ESP to be confident about an earnings beat.

Notably, we caution against stocks with Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the chemical industry that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Kraton Corporation , with an Earnings ESP of +25.46% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Versum Materials, Inc. , with an Earnings ESP of +2.38% and a Zacks Rank #2.
 
Quaker Chemical Corporation (KWR - Free Report) , with an Earnings ESP of +5.04% and a Zacks Rank #3.

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