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

International Flavors & Fragrances Inc. IFF is scheduled to report second-quarter 2020 results after the closing bell on Aug 10.

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for quarterly revenues is currently pegged at $1,214 million, indicating a decrease of 6% from the year-ago quarter. The Zacks Consensus Estimate for earnings per share is pegged at $1.33, suggesting growth of 2.3% year on year.

Key Factors

The company has witnessed a slowdown in demand in two categories — Fine Fragrance and Food Service — due to the coronavirus pandemic. These declines are primarily a result of the travel and shelter-in-place restrictions as well as the closure of retail outlets. Together, these categories generate around 15% of the company’s revenues. During the first two months of the June-end quarter, currency neutral sales for these categories plunged 40% year over year. Therefore, operating margin in the quarter under review might have been impacted as a result of decreased sales in these higher margin categories. Further, the company’s sales dipped 7% on a reported basis and 3% on a currency neutral basis, year over year, during the April-May period due to prevalent pressure in certain end-market categories across few countries on account of the pandemic. These factors might have dampened the company’s top-line performance in the quarter under review.

Nevertheless, International Flavors has been benefiting from favorable markets for flavors and fragrances, supported by demand for a variety of consumer products and growth in emerging markets. Further, new business wins and the Frutarom acquisition are anticipated to have aided the company’s performance during the period under consideration.

International Flavors is anticipated to have benefited from significant demand for packaged food, beverage and personal care and hygiene products amid the coronavirus pandemic during the June-end quarter. Moreover, focus on driving efficiency through its cost and productivity initiatives, margin improvements as well as acquisition-related synergies and favorable taxes are likely to have boosted overall profitability during the April-June quarter.

The Taste segment’s Zacks Consensus Estimate for revenues is pegged at $781 million for the to-be-reported quarter. This projection indicates whopping growth of 80% from the prior-year quarter’s $434 million. It is anticipated to report an operating profit of $141 million in the second quarter, suggesting a year-over-year rise of 43.8%. The segment is poised to grow on improved volumes, business wins and robust project pipeline.

The Zacks Consensus Estimate for the Scent segment’s revenues is pegged at $429 million, calling for a decline of 9.8% from the year-earlier quarter. The segment’s operating profit estimate is pinned at $75 million, suggesting a year-over-year fall of 17.6%.

International Flavors Fragrances Inc. Price and EPS Surprise

International Flavors  Fragrances Inc. Price and EPS Surprise

International Flavors Fragrances Inc. price-eps-surprise | International Flavors Fragrances Inc. Quote

Earnings Whispers

Our proven model does not predict an earnings beat for International Flavors this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for International Flavors is +0.75%.

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

Price Performance

Over the past year, the company’s shares have gained 5.9%, outperforming the industry’s growth of 2.7%.

Stocks to Consider

Here are a few Consumer Staples stocks which you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Ollie's Bargain Outlet Holdings, Inc. OLLI has an Earnings ESP of +8.86% and currently sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

Inter Parfums, Inc. IPAR has an Earnings ESP of +31.25% and carries a Zacks Rank of 3, at present.

New Age Beverages Corporation NBEV, a Zacks #3 Ranked stock, has an Earnings ESP of +5.26%.

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International Flavors Fragrances Inc. (IFF): Free Stock Analysis Report
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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.

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