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What's in Store for International Flavors' (IFF) Q2 Earnings?

Zacks Equity Research

International Flavors & Fragrances Inc. IFF is scheduled to report second-quarter 2019 results after the closing bell on Aug 5.

The Zacks Consensus Estimate for total revenues for the to-be-reported quarter is pegged at $1.30 billion, indicating a 41.8% jump from the year-ago quarter. The Zacks Consensus Estimate for earnings is pegged at $1.61 for the second quarter, suggesting a fall of 3% from the year-ago quarter.

Factors at Play

The company is gaining from favorable markets for flavors and fragrances, backed by rising variety of consumer-product demand and anticipated growth in emerging markets in the second quarter. Further, new business wins and the Frutarom acquisition are likely to aid the company’s performance.

International Flavors is aimed at boosting efficiency through its cost-cutting efforts and productivity initiatives in order to support overall profitability. However, raw-material cost inflation and operating expenses will keep dragging down the company’s margins.

Moreover, International Flavors anticipates mid-single-digit inflation in its legacy business in the current year as synthetic materials continue to rise, on account of several supply chain disruptions it has been facing over the last 12 to 15 months. In addition, higher interest expenses due to high-debt level and unfavorable foreign-currency translation impact are causes of concern. These will likely dent the to-be-reported quarter’s results and profitability.

The Flavors segment’s Zacks Consensus Estimate for revenues is pegged at $448 million for the second quarter. This projection indicates a decline from the prior-year quarter’s $451 million. It is anticipated to report an operating profit of $114 million in the quarter under review, suggesting a 3.6% improvement from the year-ago quarter’s $110 million.

The Fragrances segment’s Zacks Consensus Estimate for revenues is pegged at $478 million for the April-June quarter, projecting 2% growth from the $469 million recorded in the year-earlier period. The segment’s operating profit is expected to be up 6.2% year on year to $86 million.

Internationa Flavors & Fragrances, Inc. Price and EPS Surprise

Internationa Flavors & Fragrances, Inc. Price and EPS Surprise

Internationa Flavors & Fragrances, Inc. price-eps-surprise | Internationa Flavors & Fragrances, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that International Flavors is likely to beat on earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is not the case here as you will see below:

Earnings ESP: The Earnings ESP for International Flavors is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: International Flavors currently carries a Zacks Rank of #4 (Sell).

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Price Performance

Over the past year, the company’s shares have gained 11.3% outperforming the industry’s growth of 7.4%.

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:

Barrick Gold Corporation GOLD has an Earnings ESP of +0.70% and carries a Zacks Rank #2, currently.

Covia Holdings Corporation CVIA has an Earnings ESP of +20.00% and carries a Zacks Rank of 3, at present.

Carpenter Technology Corporation CRS has an Earnings ESP of +0.27% and currently carries a Zacks Rank #3.

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Internationa Flavors & Fragrances, Inc. (IFF) : Free Stock Analysis Report
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