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The latest earnings update International Flavors & Fragrances Inc. ( NYSE:IFF ) released in December 2018 indicated that the business experienced a robust tailwind, eventuating to a double-digit earnings growth of 14%. Below is my commentary, albeit very simple and high-level, on how market analysts predict International Flavors & Fragrances’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for next year seems buoyant, with earnings climbing by a significant 73%. This high growth in earnings is expected to continue, bringing the bottom line up to US$773m by 2022.
Although it’s informative understanding the growth rate year by year relative to today’s level, it may be more insightful to determine the rate at which the company is rising or falling every year, on average. The advantage of this technique is that we can get a better picture of the direction of International Flavors & Fragrances’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 19%. This means, we can expect International Flavors & Fragrances will grow its earnings by 19% every year for the next few years.
For International Flavors & Fragrances, I’ve compiled three important factors you should further research:
- Financial Health : Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation : What is IFF worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether IFF is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of IFF? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.