Inter Parfums (IPAR) Down 19.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Inter Parfums (IPAR). Shares have lost about 19.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Inter Parfums due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Inter Parfums Q4 Earnings Meet Estimates, View Down
Inter Parfums, Inc. delivered fourth-quarter 2019 results, with the top and the bottom line meeting the Zacks Consensus Estimate. Moreover, earnings were flat year on year. Nevertheless, revenues rose on a year-over-year basis. Sturdy brand performances across U.S. operations fueled the metric.
Quarter in Details
The company posted earnings per share of 26 cents, in line with the Zacks Consensus Estimate.
Net sales for the quarter amounted to $177.8 million, up 0.3% on a year-over-year basis. Moreover, revenues were in line with the consensus mark. At comparable-currency exchange rates, net sales inched up 1.5%. Growth across the U.S. operations boosted sales in the reported quarter.
In U.S. based operations, net sales rose 14.7% to $48.7 million. Net sales in the European-based operations amounted to $129.1, down 4.2% year on year.
Gross profit amounted to $114.7 million, down 2.1% year on year. Further, gross margin was 64.5%, down 160 basis points (bps).
SG&A expenses amounted to $102.3 million, down 3.9% year on year. Also, as a percentage of net sales, SG&A expenses were 57.6%. The metric declined from 60.1% in the prior-year quarter.
Operating income came in at $12.3 million, up 16.5% year on year. Further, operating margin was 6.9%, up 90 bps.
Other Financial Aspects
The company ended the quarter with cash and cash equivalents of $192.4 million, long-term debt (excluding current portion) of $10.7 million and total shareholder equity of $468 million.
The company declared a quarterly dividend of 33 cents. The dividend will be paid out on Apr 15, 2020 to shareholders on record as on Mar 31, 2020.
Guidance
In 2020, management expects sales to be aided by fragrance launches at key brands. The company launched a new women’s fragrance range by Coach brand in the beginning of 2020 in Europe. Also, Inter Parfums plans to launch women’s scent for Montblanc sometime this spring in the region. Moreover, management hopes to launch scents from brands like Jimmy Choo and Kate Spade New York during the year in Europe. For U.S. operations, the company plans to launch new fragrance under the GUESS and Hollister brands sometime this spring. Moreover, Inter Parfums is optimistic about the debut of a number scents from brands like Anna Sui and Graff in the region.
That said, the company is mindful of the recent outbreak of coronavirus. Inter Parfums has been witnessing significant decline in air travel along with reduced customer traffic in major shopping and tourist destinations. Consequently, management delayed various launches toward the end of 2020. Management stated that if the prevalence of coronavirus impact is limited to the initial few months of 2020, it expects net sales and net income to be in line with 2019 numbers. In 2019, Inter Parfums delivered net sales of $713.5 million, whereas net income was $1.90 per share. The company had earlier envisioned net sales to be roughly $742 million in 2020, while net income was earlier expected to be nearly $2.00 per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -19.81% due to these changes.
VGM Scores
At this time, Inter Parfums has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Inter Parfums has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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