Long-established in the Chemicals industry, International Flavors & Fragrances Inc (IFF, Financial) has enjoyed a stellar reputation. Recently, the company experienced a daily gain of 1.62%, juxtaposed with a three-month change of 13.92%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of International Flavors & Fragrances Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 6/10
- Growth rank: 1/10
- GF Value rank: 6/10
- Momentum rank: 10/10
Based on the above method, GuruFocus assigned International Flavors & Fragrances Inc a GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding International Flavors & Fragrances Inc's Business
International Flavors & Fragrances is the largest specialty ingredients producer globally. The company sells ingredients for the food, beverage, health, household goods, personal care, and pharmaceutical industries. The company makes proprietary formulations, partnering with customers to deliver custom solutions. The nourish segment, which generates roughly half of revenue, is a leading flavor producer and also sells texturants, plant-based proteins, and other ingredients. The health and biosciences business, which generates around one fourth of revenue, is a global leader in probiotics and enzymes. IFF is also one of the leading fragrance producers in the world.
Financial Strength Breakdown
International Flavors & Fragrances Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 1.7, which positions it worse than 87.88% of 1172 companies in the Chemicals industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. Additionally, the company's Altman Z-Score is just 1.03, which is below the distress zone of 1.81, suggesting that the company may face financial distress over the next few years. Moreover, the company's low cash-to-debt ratio at 0.07 indicates a struggle in handling existing debt levels.
Growth Prospects
A lack of significant growth is another area where International Flavors & Fragrances Inc seems to falter, as evidenced by the company's low Growth rank. Additionally, International Flavors & Fragrances Inc's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Considering International Flavors & Fragrances Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors seeking more robust investment opportunities may explore other companies with stronger GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
