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Bear Of The Day: International Flavor and Fragrances (IFF)

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International Flavor and Fragrances  (IFF - Free Report) is a Zacks Rank #5 (Strong Sell) and recently beat earnings.  Following the recent earnings beat, the stock has continued higher.   This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.


International Flavors & Fragrances Inc. manufactures and sells cosmetic active and natural health ingredients for use in various consumer products. It operates through Nourish, Scent, Health & Biosciences, and Pharma Solutions segments. The Nourish segment offers natural and plant-based specialty food ingredients. The Scent segment provides fragrance compounds. The Health & Biosciences segment develops and produces enzymes, food cultures, probiotics, and specialty ingredients. The Pharma Solutions segment produces and sells cellulosics and seaweed-based pharma excipients. International Flavors & Fragrances Inc. was founded in 1833 and is headquartered in New York, New York.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of IFF, I four straight beats of the  Zacks Consensus Estimate.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For IFF I see annual estimates moving higher of late.

The current fiscal year consensus number moved lower from $5.38  to $5.60 over the last 60 days.  There was a period of time that saw the estimate move lower to $5.30, but this stock will probably soon increase from a Zacks Rank #5 (Strong Sell).

The next year has moved from $5.97 to $5.82.  That move lower is probably the biggest deciding factor for this stock to be a Zacks Rank #5 (Strong Sell).

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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