DCF Studio

    IFF · NYQ · Basic Materials

    International Flavors & Fragrances Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 26.77

    Market price

    USD 82.96

    Implied upside

    -67.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 26.77-67.7%
    Exit multiple
    USD 54.76-34.0%
    Market price
    USD 82.96

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 10.4bnUSD 10.0bnUSD 9.5bnUSD 9.1bnUSD 8.7bn-4.3%
    EBITUSD 745.3mUSD 712.9mUSD 682.0mUSD 652.4mUSD 624.1m-4.3%
    NOPATUSD 646.1mUSD 618.0mUSD 591.2mUSD 565.6mUSD 541.0m-4.3%
    Add depreciation & amortisationUSD 966.2mUSD 924.3mUSD 884.2mUSD 845.8mUSD 809.1m-4.3%
    Less capital expenditureUSD -468.7mUSD -448.4mUSD -428.9mUSD -410.3mUSD -392.5m-4.3%
    Less increase in working capitalUSD 272.9mUSD 261.0mUSD 249.7mUSD 238.9mUSD 228.5m+4.3%
    Free cashflow to firmUSD 1.4bnUSD 1.4bnUSD 1.3bnUSD 1.2bnUSD 1.2bn-4.3%
    Discount factor0.95830.88000.80810.74210.6814-
    Present valueUSD 1.4bnUSD 1.2bnUSD 1.0bnUSD 920.1mUSD 808.3m-12.2%
    Present Value Of The ForecastUSD 5.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.969Reported 0.953, pulled toward 1.0 (Blume)
    Cost of equity10.32%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 21.2bn76.2% of capital
    Total debtUSD 6.6bn23.8% of capital, book value as a proxy
    Tax rate13.3%Effective, capped at statutory
    WACC8.90%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 26.77

    59% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 962.5m
    Less reinvestment at g/ROIC (28.1% of NOPAT)
    USD -270.5m
    Capitalised
    USD 692.1m
    ROIC (WACC floor)
    8.9%
    Terminal value, undiscounted
    USD 11.1bn
    Terminal value, discounted
    USD 7.6bn
    Enterprise value
    USD 12.9bn
    Less net debt
    USD 6.0bn
    Equity value
    USD 6.9bn

    Exit at 15.1x EBITDA

    Value per shareUSD 54.76

    73% of EV

    Terminal value, undiscounted
    USD 21.6bn
    Terminal value, discounted
    USD 14.7bn
    Enterprise value
    USD 20.0bn
    Less net debt
    USD 6.0bn
    Equity value
    USD 14.0bn

    Spread between methods: 69%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.90%39.1339.3339.5339.7339.93
    7.90%32.0132.1832.3532.5232.69
    8.90%26.4826.6226.7726.9127.06
    9.90%22.0522.1722.3022.4222.54
    10.90%18.4118.5218.6318.7418.85

    Outlined: this model. Green text: above today's price of 82.96. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-4.3%23.7%+28.1pp
    EBIT margin7.2%22.6%+15.4pp
    Discount rate8.9%3.9%-5.0pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.