Can International Flavors & Fragrances (IFF) Surprise This Earnings Season? - Analyst Blog

International Flavors & Fragrances Inc. IFF is slated to report its first-quarter 2014 results before the market opens on May 6. In fourth-quarter 2013, the company recorded a positive earnings surprise of 1.10% as well as provided an encouraging outlook for 2014.

Let us see how things are shaping up for first-quarter 2014 earnings release and whether the company will be able to post another quarter of upbeat results.

Factors to Influence Q1 Results

International Flavors & Fragrances' stellar performance in fourth-quarter 2013 coupled with a robust outlook for 2014 have made investors optimistic of strong growth in the quarters ahead. The company's share price, since Feb 13, has risen by 12%, while year-to-date gain is nearly 31.3%.  

For 2014, International Flavors & Fragrances anticipates growth in revenues and earnings to remain strong. Acquired assets of Aromor, in Jan 2014, are expected to add 1% to local currency sales growth and be accretive to earnings in 2014. Also, the company plans to invest $50 million in Indonesia for expansion of its Flavors business in the region. Besides expansion plans, the company's investments are aimed to strengthen its innovation platforms. Rewarding shareholders also remains a priority for the company.

In the past 5 years, International Flavors & Fragrances' earnings grew 10.5%, while it is expected to grow 6.5% over the next 5 years.

However, weather-related adversities in the United States in first-quarter 2014 impacted various industries across the country. Also, foreign currency translations remain a prime cause of concern.

Earnings Whispers?

Our proven model does not conclusively show that International Flavors & Fragrances is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: International Flavors & Fragrances has an ESP of 0.00% for first-quarter 2014. Both the Zacks Consensus Estimate and the Most Accurate estimate stand at $1.25.

Zacks Rank: International Flavors & Fragrances carries a Zacks Rank #2 (Buy), which together with a 0.0% ESP makes surprise prediction difficult.

Other Stocks to Consider

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

Kraton Performance Polymers Inc. KRA, with Earnings ESP of +10.71% and a Zacks Rank #2.

Kronos Worldwide, Inc. KRO, with Earnings ESP of +30.77% and a Zacks Rank #2.

Cabot Corporation CBT, with Earnings ESP of +1.19% and a Zacks Rank #2.