International Flavors & Fragrances (IFF) to Miss Q2 Earnings? - Analyst Blog


International Flavors & Fragrances Inc. ( IFF ) is scheduled to report its second-quarter 2014 results on Aug 5 before the market opens. The Zacks Consensus for the quarter is pegged at $1.35.

The company reported better-than-expected results in the first quarter, with a positive earnings surprise of 5.60%. Let us see how things are shaping up for this quarter and whether International Flavors & Fragrances will be able to post another quarter of upbeat results.

Factors to Influence Q2 Results

Population growth and wealth creation, especially in the emerging nations, are strengthening the demand for consumer products including flavors and fragrances.

International Flavors & Fragrances maintains an exhaustive research and development wing that focuses on developing new and innovative compounds. The company's diversified product mix will enable it to capitalize on the growing worldwide demand for flavors and fragrances. Further, the acquisition of Aromor Flavors and Fragrances in Jan 2014 will boost its core sales and earnings growth.

However, the challenge of operating in a highly competitive environment persists for International Flavors & Fragrances. Also, the company faces risks arising from currency translation and disruption in supply of important raw materials.

Earnings Whispers?

Our proven model does not conclusively show that International Flavors & Fragrances is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: International Flavors & Fragrances has an Earnings ESP of 0.00% for second-quarter 2014. This is because both the Zacks Consensus Estimate and the Most Accurate estimate stand at $1.35.

Zacks Rank: International Flavors & Fragrances carries a Zacks Rank #3 (Hold), which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Other Stocks to Consider

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

Green Plains Inc. ( GPRE ), with an Earnings ESP of +7.32% and a Zacks Rank #1 (Strong Buy).

The Sherwin-Williams Company ( SHW ), with an Earnings ESP of +1.27% and a Zacks Rank #2 (Buy).

Celanese Corporation ( CE ), with an Earnings ESP of +0.70% and a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: SHW , IFF , CE , GPRE

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