We issued an updated research report on International Flavors & Fragrances Inc. IFF on Jun 30, 2015. The company is engaged in creation and manufacture of fragrance and flavor products in the U.S. as well as internationally.
The most attractive feature of International Flavors & Fragrances is its solid product portfolio. While the company’s flavors are extensively used in processed foods, beverages, dairy and confectionery products; its fragrances witness demand from perfume and toiletry manufacturers. Also, the company’s research and development wing is constantly endeavoring to develop new and innovative compounds.
Despite long-term growth potential, International Flavors & Fragrances is not immune to the negative impact of near-term headwinds. Adverse currency movements are likely to hurt profitability in the quarters ahead; while geopolitical issues in some foreign markets might negatively affect its results.
In first-quarter 2015, the company’s adjusted earnings of $1.45 per share surpassed the Zacks Consensus Estimate of $1.42 but revenues of $775 million lagged the Estimate of $779 million. Top-line growth was negatively impacted by adverse foreign currency movements.
Also, International Flavors & Fragrances sources its raw materials from various foreign countries, and hence, is susceptible to risks from disruptions in supply or quality of ingredients or rising prices. Moreover, uncertain economic conditions might limit consumer spending, and subsequently impact the demand for the company’s products.
International Flavors & Fragrances, with a market capitalization of $8.8 billion, currently carries a Zacks Rank #4 (Sell). The ranking is justified by near-term concerns surrounding the stock that led to downward revisions in earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 2.9% to $5.35 per share for 2015 and 3.5% to $5.77 for 2016.
Also, some of International Flavors & Fragrances’ prime competitors are performing well, having gained high Zacks investment rankings. Better-ranked stocks in the chemical-specialty industry are Ferro Corporation FOE, Flexible Solutions International Inc. FSI and KMG Chemicals Inc. KMG, all sporting a Zacks Rank #1 (Strong Buy).
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