Sensient Beats, Guides Higher

Sensient Technologies Corporation’s (SXT - Snapshot Report) first quarter 2011 earnings of 53 cents per share surpassed the Zacks Consensus Estimate by a penny and increased 10.4% from 48 cents posted in the prior-year quarter. The better-than-expected results were attributable to strong performance of the Color Group segment.

Total revenue jumped 11.3% year over year to $349.7 million during the quarter. Total revenue was also benefited by the favorable currency impact of 1% 

Quarter Highlights

In the reported quarter, the specialty chemicals company experienced higher sales across all its business segments.

Sales of the Color Group segment rose 16.4% year over year to $125.7 million during the quarter, driven by solid demand for food and beverage colors, particularly natural colors. Operating income leaped 23.4% to $22.3 million.

Flavors & Fragrances Group reported revenue of $206.7 million, up 8.4%, attributed to solid volume gains in traditional flavors and dehydrated flavors. Operating income spiked 6.5% to $29.0 million.

Operating income of the company expanded 12.8% to $43.6 million due to higher sales volume. Selling and administrative expenses and cost of products sold climbed 13.9% and 10.4%, respectively.

Financial Position

The Milwaukee, Wisconsin-based company ended the quarter with cash flow from operations of $28.4 million, up 21.2% from the prior-year period. As of March 31, 2011, long-term debt was $343.9 million, down from $373.7 million as of March 31, 2010.

Outlook

The company raised its 2011 earnings guidance range to $2.28 to $2.34 from its previous forecast of $2.26 to $2.32. The Zacks Consensus Estimate for 2011 is pegged at $2.33 per share.

Our Take

Based on better-than-expected results and higher outlook, we expect estimates to go up in the coming days. However, in the last 30 days estimates have not budged, implying the lack of near-term catalysts.

Sensient holds a Zacks #2 Rank, implying a short-term Buy rating. Besides, we are also maintaining our long-term Neutral recommendation on the stock.

One of Sensient Technologies’ primary competitors, Arch Chemicals Inc. (ARJ) is expected to announce its first quarter 2011 results on May 4, 2011.

Read the full analyst report on SXT

Read the full analyst report on ARJ