International Flavors & Fragrances Inc (IFF)

Conclusion

International Flavors & Fragrances makes flavours, food ingredients, health and biosciences products, and fragrances for food, beverage, personal care and home markets. At 84.43 USD on 9 November 2026, the company has a market capitalisation of 21.1 billion USD and an enterprise value of 27.7 billion USD.

The verdict is overvalued. The P/E of 108.4 and the EV/EBITDA of 23.1 are high, and the price to sales ratio of 2.29 sits above its ten-year median of 1.93. The DCF gives 53.80 USD per share. The fair value band runs from 51.52 to 77.27 USD with a midpoint of 64.39 USD, and the margin of safety is -23.7% at the current price. The fair value from historical multiples is 74.99 USD. The reverse DCF implies revenue growth of 18.8% a year, against 16.5% revenue growth over five years, while free cash flow per share fell 26.3% a year over the same period.

What holds the case up: revenue grew 16.5% a year over five years and in 7 of the last 10 comparable years, the current ratio is 1.87, and the Beneish M-score of -2.59 points to an unlikely case of earnings manipulation. What would break it: net debt to EBITDA of 5.45, interest coverage of 1.87, and ROIC of 1.38% against a WACC of 7.96%. The share count has also grown 17.6% a year over five years, which dilutes each shareholder.

Financial health

Financial strength is red: the current ratio of 1.87 holds it up, while net debt to EBITDA of 5.45 and interest coverage of 1.87 pull it down. The quick ratio is 0.44 and debt to equity is 0.51. The Altman Z-score is 1.53, in the distress zone. Insolvency risk: low, about 0.5% by the estimate of the Ohlson model over one to two years, based on figures as at 31 December 2025. A low estimate from one model does not offset the weak leverage and coverage figures above, which are the main pressure on the balance sheet. The company's debt is large relative to its earnings, so any drop in operating profit would leave less room to cover interest.

Earnings quality

Earnings quality is yellow. The Beneish M-score of -2.59 reads as unlikely manipulation, and free cash flow conversion of 2.56x over the last twelve months is strong. Five-year free cash flow conversion is not available. The accrual ratio is -4.5%, and stock-based compensation is 0.94% of revenue, leaving 412 million USD of free cash flow after it. The Piotroski score is 6 of 9. The five-year share count has grown 17.6% a year, which points to dilution rather than buybacks. Seven of the last eight quarters beat estimates, with an average surprise of 6.2%. Estimate revisions are negative: the current year estimate is down 29.7% over 90 days, and the next year estimate is down 18.1%, with four downward and two upward revisions in the last 30 days.

Profitability

Profitability is red. ROIC of 1.38% sits well below a WACC of 7.96%, a ROIC minus WACC of -6.58%, so the business currently earns less on its capital than that capital costs. The five-year median ROIC is -0.72%. Gross margin is 38.87% against a ten-year median of 38.60%, but the operating margin of 7.70% sits below its median of 9.43%, and the net margin of 2.11% sits below its median of 4.74%. Operating margin stability is 1.78. ROE is 1.47%, and leverage is not inflating it: the 2025 DuPont split shows a net margin of -3.31%, an asset turnover of 0.43 and an equity multiplier of 1.80. The tax rate is assumed at 21%.

Growth

Growth is green. Revenue compounded at 16.5% over five years and 13.7% over ten years, but the three-year compound rate is -4.3%. Revenue grew in 7 of 10 comparable years. Free cash flow per share fell at a compound rate of 26.3% over five years and 14.0% over ten. The EPS compound growth rate is not available. Analysts expect next-year EPS to grow 24.6%, but the revisions to that estimate have been negative.

Valuation

Valuation is red. The P/E of 108.4, EV/EBITDA of 23.1 and P/FCF of 42.4 are high, and their ten-year medians are not available. The price to sales ratio of 2.29 is 18.5% above its ten-year median of 1.93, and the price to book ratio of 1.59 is 7.2% above its median of 1.49. The FCF yield is 2.36% and the earnings yield is 0.92%. The DCF gives 53.80 USD per share at a discount rate of 9.28%, with five-year growth of 16.5% and terminal growth of 2.5%. The fair value band runs from 51.52 to 77.27 USD, with a midpoint of 64.39 USD and a margin of safety of -23.7% at a price of 84.43 USD. The reverse DCF implies 18.8% growth, against 16.5% revenue growth delivered over five years. The fair value is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, not a price target. The dividend yield is 1.93% and the payout on free cash flow is 82.0%.

Risks

The weakest numbers would each hit the business in a different way. Net debt to EBITDA of 5.45 and interest coverage of 1.87 mean that interest payments absorb much of operating profit. ROIC below WACC means new investment currently earns less than it costs. Share count growth of 17.6% a year dilutes each holder, and negative estimate revisions suggest lower expectations for earnings. Several values are not available: the ten-year medians for P/E, EV/EBITDA and P/FCF, five-year free cash flow conversion, and the EPS compound growth rate. This analysis has no debt maturity schedule and no revenue by segment, so it cannot show when debt falls due or which parts of the business drive growth. One historical data point was discarded from the price history.