INTERNATIONAL FLAVORS & FRAGRANCES INC (IFF): what the price requires

At today's price, INTERNATIONAL FLAVORS & FRAGRANCES INC (IFF) is priced for +17.2% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/IFF

Headline

FieldValue
TickerIFF
CompanyINTERNATIONAL FLAVORS & FRAGRANCES INC
Current price$74.97/sh
CompositionTaste 23% / Food Ingredients 30% / Health & Biosciences 21% / Scent 23% / Pharma Solutions 3%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed4.5%
Operating margin (mid-cycle)8.9%
Margin compression implied-4.4pp
Trailing margin (depressed year)-1.9%
Implied growth17.2%
Multiple paid27x mid-cycle operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 8.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8pp.

Reconcile: at the x-ray's 9.3% required return this reads ~5.1 years; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.71σ
sustained it ~5 years at this level47%
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.79x5expensive
Earnings1.43x2expensive
Relative1.49x5expensive
Growth1.59x2expensive

Families that call it expensive: Asset, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.2%); the inversion above states its own rate.

Per-Model Detail (n=14)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noFCF base $0.4B, growth -6% (input: historical growth), terminal g 0.5%, WACC 7.2%, 5yr projection
DCF Exit MultipleGrowth$58.521.28xyesExit EV/EBITDA: 11.9x / 13.9x / 15.9x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$50.301.49xyesP/E 16.78x (blended: static sector reference 14x + trailing (TTM) 23x), scenarios: 14.2x / 16.8x / 19.4x (bear / base = reference held flat / bull), EV/EBITDA 9.78x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$34.832.15xyesBV/sh $54.94, ROE (TTM) 5.9%, ke 9.3%
Two-Stage Excess ReturnAsset$26.902.79xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$39.511.90xyesRev $10.8B, growth -6% (input: historical growth; tapered), Terminal P/S: 1.5x / 1.8x / 2.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$38.761.93xyesEPS $3.23, growth 1% (input: historical EPS growth), PEG=20.04 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.017497.00xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.32B × (1−19%) / WACC 7.2% → EPV (no growth) (excluded from median)
Residual IncomeAsset$25.882.90xyesBV $54.94 + 5yr PV of (ROE (TTM) 5.9% − Kₑ 9.3%) × BV; BV grows 3.8%/yr
Graham NumberAsset$63.191.19xyes√(22.5 × EPS $3.23 × BVPS $54.94) — Graham's conservative floor
EV/EBITDA RelativeRelative$34.162.19xyesEBITDA $1.77B × sector EV/EBITDA 8.0x
FCF YieldEarnings$0.017497.00xyesFCF $400.0M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings$0.017497.00xyesSBC-adj FCF $0.31B (FCF $0.40B − SBC $0.09B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings$104.220.72xyesEPS $3.23 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$8.688.64xyesBV $54.94 × (ROIC 1.1% / WACC 7.2%)
P/Sales SectorRelative$62.961.19xyesRevenue $10.79B × sector P/S 1.5x
PEG Fair ValueRelative$121.130.62xyesEPS $3.23 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$34.922.15xyesEPS $3.23 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$6.4b
Net debt / NOPAT (after-tax)7.96x
Net debt / operating income (pre-tax)6.48x
Interest coverage4.4x
Share count CAGR (dilution)0.2%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 8.9%); the trailing year was depressed.

Bullet Takeaways

Bull Case

IFF is a mature business caught mid-restructuring, and that stage is the key to reading its numbers, because the trailing profit understates what the assets earn through a normal cycle. The company makes the flavors that go into food, the fragrances that go into consumer products, and the enzymes and cultures that go into both. These are small-dollar, high-value inputs that customers design into their products and rarely switch out, which is why the underlying segments earn healthy margins even while the consolidated figure looks depressed. The filing shows the quality underneath: Health & Biosciences segment adjusted operating EBITDA reached "$594 million (26.0% of segment sales) in 2025", a margin a commodity chemicals business could never sustain. The mid-cycle operating margin on current revenue is closer to 9% than the 7.4% the trailing quarter shows, so the earnings power is real; it is just buried under one-time costs and a soft patch.

The transformation is the bull's near-term engine. Management has been simplifying the portfolio aggressively: it completed the divestiture of Pharma Solutions to Roquette in May 2025 and the Nitrocellulose business, and it agreed to sell Food Ingredients to CVC Capital Partners for about $4.3 billion, with closing targeted by late Q2 2027. Each sale does two things at once. It removes a lower-margin or non-core business, lifting the quality of what remains, and it generates cash that pays down debt. The deleveraging is already visible: net-debt-to-EBITDA fell to about 2.6 times from 3.8 times at the end of 2024, crossing below the 3.0 times threshold the company had targeted.

The re-rating case follows from the deleveraging. A company carrying six times operating income in net debt trades at a discount for the balance-sheet risk alone. As that debt comes down toward a comfortable level, the equity captures the full value of the remaining high-margin Taste and Scent and Health & Biosciences franchises without the leverage discount weighing on it. The share count has been essentially flat, so the proceeds are going to debt rather than to dilution. The bull case does not need the business to suddenly accelerate; it needs the cleaner, lower-leverage IFF that emerges from the divestiture program to be valued like the stable specialty-ingredients franchise it is rather than like a stressed balance sheet.

Bear Case

The variable with the most leverage on IFF is the cost and weight of its own debt, and the current price does not reflect how much rests on it. Net debt is about $6.4 billion, roughly 6.6 times a year's operating income, with interest covered only about 4.8 times by operating profit. That is a balance sheet built during a high-rate environment and now being unwound one asset sale at a time. The deleveraging plan is sound, but it is also the thesis: if the Food Ingredients sale to CVC slips past its late-Q2-2027 target, or closes at a lower price than the agreed $4.3 billion, the leverage stays elevated for longer, and a leveraged company in a soft demand environment is exactly where equity holders absorb the volatility. The filing is explicit that its leverage measures exist "to provide information on the extent to which we are in compliance with debt covenants", a reminder that covenants, not just optics, govern this balance sheet.

That balance-sheet exposure runs into a price that no standard method supports. At about $76 (June 27, 2026) the market values IFF at roughly 27 times its through-cycle operating income, which embeds company-wide operating growth near 18% a year for five years. Even valued on its normalized mid-cycle margins rather than the depressed trailing quarter, every family of valuation method lands below the price: asset, earnings-power, peer-multiple, and even the forward-growth methods all say the price is rich. When no family reaches the price, the market is paying for an outcome beyond what any conventional frame can justify. The implied growth also sits against a recent reality where divestitures cut sales: the Pharma Solutions exit alone carried roughly a 7% adverse impact to 2025 sales growth and about 8% to adjusted operating EBITDA growth. The company is shrinking to strengthen, which is the right move, but it makes the 18% growth the price assumes harder, not easier, to reach in the near term.

Returns on capital expose the cost of the merger that created this IFF. Return on invested capital sits near 1%, far below the cost of capital, because the balance sheet is dominated by goodwill and intangibles from the Nutrition & Biosciences combination. Return on equity is under 6%, barely above zero in economic terms. A business that earns less on its capital than the capital costs is destroying value at the margin until the divestitures and cost actions change the math. The bear case is not that IFF's products lose their place on the shelf; they will not. It is that the equity is a leveraged claim on a slow-growing, low-return asset base, priced as if the turnaround has already succeeded, while the debt clock keeps running.

Valuation

Read the price through the cycle, not the trough. Trailing earnings are depressed, so the inversion uses IFF's own through-the-cycle margins on current revenue: on that basis the market is paying about 27 times mid-cycle operating income at $76, which embeds company-wide operating growth near 18% a year for five years. That rate is within what IFF has delivered in better years, and roughly 45% of comparable companies have sustained a pace like it for five years, so the assumption is demanding but not fantastical. The harder fact is that recent growth has been negative as divestitures shrink the company, so the price assumes a reacceleration that the portfolio actions push further out before they bring it closer.

The methods we use to triangulate are unanimous in one direction: all of them land below the price. Earnings-power approaches such as capitalized free cash flow sit low because trailing free cash flow is modest against a large enterprise value. Asset and book-value methods land below the price even though book value per share is about $55, because return on equity near 6% only modestly clears the cost of equity. Peer multiples put it below as well. Even the forward-growth methods, which usually rescue a premium name, do not reach the price here. When no family reaches it, the price is a bet beyond what any standard frame supports, which for IFF means the market is paying for the post-divestiture, deleveraged business to emerge and be valued cleanly, not for the financials as they stand today.

Solvency is the load-bearing element, so it belongs at the center rather than the close. IFF carries about $6.4 billion of net debt, roughly 6.6 times a year's operating income on the company's reported basis, with interest coverage near 4.8 times. Management has cut the leverage ratio to about 2.6 times net-debt-to-EBITDA from 3.8 times at the end of 2024 using divestiture proceeds, and the agreed Food Ingredients sale to CVC for about $4.3 billion is the next major step. The downside here is not bounded by net cash, because there is none; it is bounded by whether the asset sales close on the prices and timing announced. The buyer at this price is underwriting the completion of a deleveraging program, with a high-margin specialty-ingredients franchise as the prize if it lands and a leveraged, low-return balance sheet as the exposure if it stalls.

Catalysts

The portfolio reshaping is the catalyst stream. IFF completed the divestiture of its Pharma Solutions business to Roquette on May 1, 2025, and its Nitrocellulose business, the two sales that drove the leverage ratio down to about 2.6 times net-debt-to-EBITDA from 3.8 times at the end of 2024 and pushed it below the company's 3.0 times target. The Pharma Solutions exit carried a near-term cost: full-year 2025 guidance reflected roughly a 7% adverse impact to sales growth and about 8% to adjusted operating EBITDA growth, because the divestiture closed partway through the year.

The next major event is the agreed sale of Food Ingredients to CVC Capital Partners for about $4.3 billion, with closing targeted by late Q2 2027. That transaction matters on two counts: the proceeds advance the deleveraging, and the simplification leaves a more focused Taste, Scent, and Health & Biosciences portfolio. Until it closes, the deal timing and price are the variables to watch, alongside each quarterly leverage update, because the stock's re-rating is tied more tightly to the balance sheet improving than to any single demand metric.

Peer Cohorts (Per Segment, With Filing Citations)

Taste (reported)

Food Ingredients (reported)

Health & Biosciences (H&B) / Scent / Pharma Solutions (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

IFF press releases, 2025 · IFF deleveraging update, 2025 · IFF 2025 guidance commentary

View the full interactive IFF report on boothcheck