Back to top

Image: Bigstock

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

Read MoreHide Full Article

International Flavors & Fragrances Inc. (IFF - Free Report) is scheduled to report first-quarter 2019 results after the closing bell on May 6.
 
Past-Quarter Performance

In the last reported quarter, the company reported a decline of 19% in earnings while revenues improved 43%. Earnings and revenues both fell short of the respective Zacks Consensus Estimate.

In the last four trailing four quarters, the company beat the Zacks Consensus on two occasions, missing in one quarter while coming in-line in the remaining one. The company has a positive average earnings surprise of 1.16% over the last four quarters. 

Internationa Flavors & Fragrances, Inc. Price and EPS Surprise

Let us see how things are shaping up for the company prior to this announcement.
 
Earnings Whispers

Our proven model does not conclusively show that International Flavors & Fragrances is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
 
Zacks ESP: International Flavors & Fragrances has an Earnings ESP of -3.33%, representing the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. While the Most Accurate Estimate is at $1.45, the Zacks Consensus Estimate is pegged higher at $1.50. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: International Flavors & Fragrances carries a Zacks Rank #3. While the company’s Zacks Rank is favorable, its negative ESP makes surprise prediction difficult.
 
Please note that we caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions..
 
Factors to Influence Q1 Results
 
The company’s upcoming quarterly results will be aided by favorable markets and new wins in the to-be-reported quarter. In fact, the recent acquisition of Frutarom has not only expanded customer base, product offerings and exposure to end markets; it will also be accretive to the company’s first-quarter results.

Focus to drive greater efficiencies throughout the business through costs and productivity initiatives and favorable taxes continue to support overall profitability. However, the company’s margins will continue to bear the brunt of raw material cost inflation. International Flavors anticipates mid-single-digit inflation in its legacy business in 2019 as synthetic materials continue to rise, on account of several supply chain disruptions it has been facing over the last 12 to 15 months. Further, costs of natural ingredients like vanilla and citrus markets remained elevated near historical levels.  Also higher selling, general and administrative expenses will constrain margins. Further, a high-debt level and unfavorable movements in foreign currencies are causes of concern. These factors are likely to impact the to-be-reported quarter’s results.

The Zacks Consensus Estimate for total revenues is pegged at $1.50 billion, indicating a decline of 11.2% from the year-ago quarter. The Zacks Consensus Estimate for earnings is pegged at $1.50 for the first-quarter 2019, suggesting a fall of 11.2% in the year-ago reported figure.
 
The Flavors segment’s Zacks Consensus Estimate for revenues is pegged at $439 million for the first quarter of 2019. This projection indicates a decline of 2% for the segment from the prior-year quarter. It is anticipated to report an operating profit of $117 million in the to-be-reported quarter, suggesting an improvement of 4% from the prior-year reported figure of $112 million.
 
The Fragrances segment’s Zacks Consensus Estimate for revenues is pegged at $475 million for the first quarter of 2018. This projection indicates a dip of 1% from the $482 million recorded in the year-ago quarter. The segment’s operating profit is expected to grow 1% year over year to $94 million.
 
Price Performance


In the last year, the company’s shares have declined 1.7% against the industry’s growth of 8.4%.
 
Stocks to Consider
 
Here are some companies in the Basic Material sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
 
Intrepid Potash, Inc. (IPI - Free Report) has an Earnings ESP of +25.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Albemarle Corporation (ALB - Free Report) has an Earnings ESP of +0.47% and a Zacks Rank #3.
 
Bunge Limited (BG - Free Report) has an Earnings ESP of +5.00% and a Zacks Rank #3.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>