Shares of Sensient Technologies (SXT) plummeted 7.94% in early trading on Friday after the food ingredients maker reported mixed second-quarter results. Despite beating earnings expectations, the company's revenue fell short of analyst estimates, raising concerns about its growth trajectory.

Sensient reported Q2 adjusted earnings of $0.94 per share, surpassing the FactSet consensus of $0.88 and showing a 20.8% year-over-year increase. However, the company's revenue of $414.23 million, while up 2.7% from the previous year, missed the average analyst expectation of $417.40 million. This revenue shortfall appears to be the primary driver behind the stock's sharp decline.

Adding to investor concerns, Sensient's stock was trading at a relatively high valuation before the earnings release. The company's price-to-earnings ratio had recently increased to 31 times the next 12-month earnings, up from 22 three months ago. This elevated valuation may have made the stock more susceptible to a selloff on any signs of weakness. Despite reaffirming its 2025 guidance, including expectations for mid-single-digit local currency revenue growth and high single-digit to double-digit adjusted EPS growth, investors seem to be reassessing the company's near-term prospects in light of the revenue miss.