Sensient Beats, Guides Higher - Analyst Blog

Sensient Technologies Corporation's (SXT) first quarter 2011 earnings of 53 cents per share surpassed the Zacks Consensus Estimate by a penny and increased 10.4% from 48 cents posted in the prior-year quarter. The better-than-expected results were attributable to strong performance of the Color Group segment.

Total revenue jumped 11.3% year over year to $349.7 million during the quarter. Total revenue was also benefited by the favorable currency impact of 1% 

Quarter Highlights

In the reported quarter, the specialty chemicals company experienced higher sales across all its business segments.

Sales of the Color Group segment rose 16.4% year over year to $125.7 million during the quarter, driven by solid demand for food and beverage colors, particularly natural colors. Operating income leaped 23.4% to $22.3 million.

Flavors & Fragrances Group reported revenue of $206.7 million, up 8.4%, attributed to solid volume gains in traditional flavors and dehydrated flavors. Operating income spiked 6.5% to $29.0 million.

Operating income of the company expanded 12.8% to $43.6 million due to higher sales volume. Selling and administrative expenses and cost of products sold climbed 13.9% and 10.4%, respectively.

Financial Position

The Milwaukee, Wisconsin-based company ended the quarter with cash flow from operations of $28.4 million, up 21.2% from the prior-year period. As of March 31, 2011, long-term debt was $343.9 million, down from $373.7 million as of March 31, 2010.

Outlook

The company raised its 2011 earnings guidance range to $2.28 to $2.34 from its previous forecast of $2.26 to $2.32. The Zacks Consensus Estimate for 2011 is pegged at $2.33 per share.

Our Take

Based on better-than-expected results and higher outlook, we expect estimates to go up in the coming days. However, in the last 30 days estimates have not budged, implying the lack of near-term catalysts.

Sensient holds a Zacks #2 Rank, implying a short-term Buy rating. Besides, we are also maintaining our long-term Neutral recommendation on the stock.

One of Sensient Technologies' primary competitors, Arch Chemicals Inc. (ARJ) is expected to announce its first quarter 2011 results on May 4, 2011.