International Flavors (IFF) Q4 Earnings: What's In Store?

International Flavors & Fragrances Inc. (NYSE:IFF) is scheduled to report fourth-quarter 2017 results on Feb 14, after market close.

In the last four quarters, the company delivered better-than-expected results in three quarters while lagging in one. Average earnings surprise was a positive 3.05%. Notably, last quarter, the company’s earnings of $1.47 per share topped the Zacks Consensus Estimate by 3.52%.

The stock carries a Zacks Rank #3 (Hold). In the last six months, the company’s shares have yielded 2.4% return, outperforming roughly 4.3% decline of the industry it belongs to.



Let us see how things are shaping up for the company prior to this announcement.

Factors to Affect Q4 Results

We believe that International Flavors & Fragrances’ solid product portfolio, large customer base and an exhaustive research and development wing will be advantageous. Veraspice — a fragrance ingredient; Tastepoint, a company to serve middle-market customers; and Re-Imagine, programs that enable capture of unaddressed opportunities in the food and beverage industry as well as assist the company’s in its innovation initiatives, are added benefits.

Also, the company’s buyouts in the past few quarters will have a positive impact. Since its acquisition in October 2016, David Michael has strengthened the company’s customer base in the fast-growing middle-markets and is predicted to generate incremental revenues of $85 million in 2017. Likewise, Fragrance Resources, acquired in January 2017, is anticipated to generate incremental revenues of $75 million and modestly boost earnings in 2017.

Commitment toward rewarding shareholders with dividends and share buybacks builds a positive momentum for the company. Also, its multi-year productivity program will help in restricting costs, make strategic investments and expand businesses globally. Despite the benefits expected from these initiatives, related pre-tax charges amounting to $35 million will likely be accrued in the year.

Unfavorable foreign currency translations remain an issue, with a likely adverse impact of 1% on operating profit growth and 2% on earnings per share growth in 2017. Also, higher raw material costs can hurt the segmental results.

For the Flavors segment, the Zacks Consensus Estimate for revenues stands at $398 million for the fourth quarter, lagging average revenues of $410 million generated in the first three quarters of 2017. Also, the operating profit for the segment is estimated to be $84 million, below an average of $96.3 million in the first three quarters of 2017.

Likewise, for the Fragrances segment, the Zacks Consensus Estimate for revenues stands at $428 million for the fourth quarter, below the average revenues of $438 million generated in the first three quarters of 2017. Also, operating profit for the segment is estimated to be $80 million, below an average of $87 million in the first three quarters of 2017.

Stocks to Consider

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

However, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

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

Valvoline Inc. (NYSE:VVV) , with an Earnings ESP of +3.63% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Versum Materials, Inc. (NYSE:VSM) , with an Earnings ESP of +1.92% and a Zacks Rank #2.

Ingevity Corporation (NYSE:NGVT) , with an Earnings ESP of +2.78% and a Zacks Rank #3.

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Ingevity Corporation (NGVT): Free Stock Analysis Report

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Internationa Flavors & Fragrances, Inc. (IFF): Free Stock Analysis Report

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