IFF’s research justifies its high P/E

Article Excerpt

INTERNATIONAL FLAVORS & FRAGRANCES INC. $135 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.0 million; Market cap: $10.7 billion; Price-to-sales ratio: 3.1; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.iff.com) makes over 38,000 compounds that improve the taste of food and the smell of consumer products. Thanks largely to acquisitions of smaller firms, IFF’s sales in the fourth quarter of 2017 rose 12.1%, to $854.6 million from $762.6 million a year earlier. Earnings gained 13.8%, to $111.3 million from $97.8 million; earnings per share rose 14.8%, to $1.40 from $1.22. IFF will probably earn $6.29 a share in 2018. The stock trades at 21.4 times that forecast. However, it spends a high 8% of its sales on research. That hurts its current earnings, and inflates its p/e. IFF is a buy. buy…

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