Inter Parfums (IPAR): Shares defining bullish 'flag' pattern

Posted Mar 24th 2008 11:11AM by Larry Schutts
Filed under: Earnings Reports, Wal-Mart (WMT), Gap Inc (GPS), Technical Analysis, Stocks to Buy

Inter Parfums (NASDAQ: IPAR) develops, manufactures and distributes prestige perfumes and cosmetics, as the exclusive worldwide licensee for such names as Burberry, Paul Smith, S.T. Dupont, Christian Lacroix, Quiksilver/Roxy and Van Cleef & Arpels. The firm owns owns Lanvin Perfumes and Nickel S.A. It also designs and manufactures personal care products under exclusive agreements with the Gap (NYSE: GPS), New York & Company (NYSE: NWY) and Brooks Brothers. Further, it makes fragrances, cosmetics and personal care products for the mass market. The latter lines are offered by such merchandisers as Wal-Mart Stores (NYSE: WMT). Inter Parfums products are sold in over 120 countries.

The firm surprised the Street last week, when it reported Q4 EPS of 41 cents and revenues of $119.4 million. Analysts had been looking for 34 cents and $119.2 million. Management also guided FY08 EPS to about $1.25 ($1.14 consensus) and FY08 revenues to about $442 million ($439.31M consensus).

The issue popped on the news and has since been defining a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the shares with one "buy" and three "holds". Analysts expect a 15% average annual growth rate, through the next five years. The IPAR P/E ratio (18.49), PEG ratio (1.23), Price to Sales ratio (1.12), Price to Book ratio (2.27), Price to Cash Flow ratio (11.27), Sales Growth rate (32.37%), EPS Growth rate (57.69%), Revenue per Employee ($1.57M) and Net Income per Employee ($123.39k) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 49% of the outstanding shares. Over the past 52 weeks, the stock has traded between $13.55 and $29.18. A stop-loss of $18.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

Tags: flag, fundamental analysis, FundamentalAnalysis, Inter Parfums, InterParfums, IPAR, momentum, technical analysis, TechnicalAnalysis