A month has gone by since the last earnings report for Interparfums (IPAR). Shares have added about 8.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Interparfums due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Inter Parfums Q3 Earnings Beat Estimates, Sales Up on Brand Strength
Inter Parfums reported impressive third-quarter 2024 earnings of $1.93 per share, up 16% from the year-ago quarter’s figure. The metric surpassed the Zacks Consensus Estimate of $1.83 per share. Quarterly net sales reached $424.6 million, reflecting a year-over-year increase of 15%. The growth was fueled by established and newly introduced fragrance brands.
Sales in European-based operations surged 21% to $282 million. This growth was propelled by the exceptional performance of the Jimmy Choo and Montblanc brands, which saw sales increases of 17% and 10%, respectively. Jimmy Choo’s sales acceleration was fueled by the launch of “I Want Choo Le Parfum”, while Montblanc’s sales were boosted by the continued success of the “Explorer and Legend” lines.
Coach, one of the company’s largest brands, maintained sales levels comparable to the third quarter of 2023, a period when Coach sales rose by 32%. This solid sales performance was also complemented by the debut of the “Lacoste Original” line.
IPAR’s U.S. operations sales rose 9% year over year to $146 million in the third quarter. The company’s largest U.S. brand, GUESS, saw a 16% rise in sales during this period, driven by the ongoing popularity of its legacy fragrances and the successful launch of GUESS Iconic.
Sales from the second-largest brand, Donna Karan/DKNY, grew 4%. Now in its third year with the company, the brand has introduced “DKNY 24/7”, which started a global rollout in September after a successful limited release over the summer.
Focus on IPAR’s Margins
IPAR’s consolidated gross profit rose 15.4% year over year to $271.2 million, whereas the gross margin remained flat at 63.9%.
During the quarter, selling, general and administrative expenses (SG&A) increased 11.7% to $165.2 million. As a percentage of sales, SG&A expenses contracted 130 basis points to 38.9%. Advertising and Promotion (A&P) expenses rose 6% and represented 15.7% of net sales. Management foresees a significant increase in A&P spending in the final quarter owing to the holiday season.
The company’s operating income came in at $106 million, up from the $87.2 million reported in the year-ago quarter. The operating margin expanded 130 basis points to 25%.
A Sneak Peek Into IPAR’s Financial Aspects
Inter Parfums ended the quarter with cash and cash equivalents of $78.4 million, long-term debt (excluding the current portion) of $134.6 million and total equity of $985.1 million.
IPAR Maintains 2024 View
With a strategic focus on innovation and product launches, Inter Parfums is well-positioned in the ongoing dynamic. The strength of a diverse brand portfolio, combined with the flexible operating model, should help it gain market share. All said, management reiterated its guidance for 2024.
For the full year, the company continues to anticipate net sales of $1.45 billion and earnings of $5.15 per share. This guidance suggests 10% growth in net sales and an 8% increase in the bottom line from the 2023 levels.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -14.26% due to these changes.
VGM Scores
Currently, Interparfums has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Interparfums has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Interparfums is part of the Zacks Consumer Products - Discretionary industry. Over the past month, Kellanova (K), a stock from the same industry, has gained 0.1%. The company reported its results for the quarter ended September 2024 more than a month ago.
Kellanova reported revenues of $3.23 billion in the last reported quarter, representing a year-over-year change of -17.9%. EPS of $0.91 for the same period compares with $1.03 a year ago.
Kellanova is expected to post earnings of $0.83 per share for the current quarter, representing a year-over-year change of +6.4%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Kellanova. Also, the stock has a VGM Score of A.
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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 Nasdaq, Inc.
