2 Reasons to Like IPAR (and 1 Not So Much)

Inter Parfums’s stock price has taken a beating over the past six months, shedding 29.4% of its value and falling to $91.15 per share. This might have investors contemplating their next move.

Following the drawdown, is now the time to buy IPAR? Find out in our full research report, it’s free.

Why Does IPAR Stock Spark Debate?

With licenses to produce colognes and perfumes under brands such as Kate Spade, Van Cleef & Arpels, and Abercrombie & Fitch, Inter Parfums (NASDAQ:IPAR) manufactures and distributes fragrances worldwide.

Two Things to Like:

1. Long-Term Revenue Growth Shows Strong Momentum

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, Inter Parfums grew its sales at a solid 14.1% compounded annual growth rate. Its growth surpassed the average consumer staples company and shows its offerings resonate with customers.

2. Stellar ROIC Showcases Lucrative Growth Opportunities

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Inter Parfums’s five-year average ROIC was 28.5%, placing it among the best consumer staples companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

One Reason to be Careful:

Fewer Distribution Channels Limit its Ceiling

With $1.46 billion in revenue over the past 12 months, Inter Parfums is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers. On the bright side, it can grow faster because it has a longer list of untapped store chains to sell into.

Final Judgment

Inter Parfums has huge potential even though it has some open questions. After the recent drawdown, the stock trades at 19× forward P/E (or $91.15 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

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