Shares of International Flavors & Fragrances Inc. (IFF) touched a new 52-week high of $92.60 during its trading session on Feb 18, the prime impetus being the company’s stellar performance in fourth-quarter 2013. The new 52-week high reflects an increase over $92.04 reached on Feb 14.
International Flavors & Fragrances closed the trading on Feb 18 at $92.54, reflecting a solid year-to-date return of 27.6%. The trading volume for the session was 0.45 million shares. Further upside potential exists for this Zacks Rank #2 (Buy) flavors and fragrances producer as can be deduced from its earnings estimate revisions in the last 7 days and expected earnings growth of 7.8% for the next five years.
Growth Drivers
International Flavors & Fragrances posted better-than-expected top- and bottom-line results in fourth-quarter 2013, in keeping with its growth trajectory. Earnings per share grew 10.8% year over year in the quarter to 92 cents and also surpassed the Zacks Consensus Estimate by 1.1%.
Revenue increased 6.6% year over year on the back of a solid performance in the emerging markets — accounting for roughly 50% of total sales in the quarter. Gross margin gained 160 basis points due to new business wins, effective product mix, innovations and cost reductions.
Future growth prospects are bright for International Flavors & Fragrances. Revenue and earnings growth are expected to remain strong in 2014. Aromor Flavors and Fragrances, acquired in Jan 2014, will be integrated into the company’s Fragrances Ingredients business and is likely to contribute 1% to local currency sales growth and be accretive to earnings.
International Flavors & Fragrances has also made investments in emerging nations to gain access to desirable customers and technologies. In this regard, the company’s investments in Singapore, India and China are worth a mention. Also, in Dec 2013, the company decided to invest $50 million in Indonesia. This move will expand the company’s Flavors business in the region.
Impressive fourth-quarter 2013 results drove the company’s share price up by 2.2% since Feb ’13 and led to positive revision in earnings estimates, discussed below. Also, Earnings ESP for 2014 is at +0.2%.
Estimate Revisions Show Potency
Over the last 7 days, the Zacks Consensus Estimate for International Flavors & Fragrances has increased by 0.4% to $4.93 for 2014 and by 0.9% to $5.38 for 2015.
International Flavors & Fragrances currently has a market capitalization of $7.5 billion. Other similarly-ranked stocks in the industry include Globe Specialty Metals, Inc. (GSM), NewMarket Corp. (NEU) and Sensient Technologies Corp. (SXT).
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