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International Flavors (IFF) Surges 5.5%: Is This an Indication of Further Gains?

International Flavors (IFF) was a big mover last session on higher-than-average trading volume. The latest trend in earnings estimate revisions might not help the stock continue moving higher in the...

This story originally appeared on Zacks

International Flavors (IFF) shares ended the last trading session 5.5% higher at $141.10. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 11.7% loss over the past four weeks.

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International Flavors & Fragrance announced that CEO Andreas Fibig is retiring after a 10-year stint at the company. The board is currently evaluating candidates and until a successor is chosen, Fibig will remain CEO and chairman. The company anticipates naming a new chief executive in early 2022.

The company recently increased its sales guidance for the current year citing ongoing strong demand in its markets. It now anticipates to deliver sales growth higher than 8% in 2021 to approximately $11.55 billion. Double-digit growth in sales is expected for the third quarter. The EBITDA guidance was trimmed to reflect the anticipated impact of inflationary costs and supply chain headwinds faced by the company and the industry at large. International Flavors now expects adjusted operating EBITDA margin for the full year to be approximately 21.5% in 2021, down from the prior expectation of 22.5%. However, the new guidance still remains above the EBITDA margin of 22% reported in 2020.

This ingredients producer for food, cosmetics and consumer products industries is expected to post quarterly earnings of $1.52 per share in its upcoming report, which represents a year-over-year change of +8.6%. Revenues are expected to be $3 billion, up 136.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For International Flavors, the consensus EPS estimate for the quarter has been revised 3.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on IFF going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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