International Flavors & Fragrances is scored 25 for moat and 18 for management. The management score rests on a return on invested capital of 3.2% and a gross margin of 36.2% — figures that describe capital earning less than it costs to employ. Debt sits at 0.47x equity.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 15.0% a year, below the 16.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 30.0x. That produces an intrinsic value of $32.40, a 10-CAP price of $28.15 and a payback time price of $44.44, with the value zone set at the highest of the three, $44.44. Today's price of $83.12 is 87% above it.
The price is above the value zone and the business scores 25 for moat and 18 for management. Neither test argues for paying up here.
| Price | $83.12 |
| Market cap | $21.2B |
| P/E ratio | 77.0x |
| Return on invested capital | 3.2% |
| Gross margin | 36.2% |
| Debt to equity | 0.47x |
| Free cash flow yield | 1.5% |
| Growth rate used | 15.0% |
| Growth rate measured | 16.0% |
| Exit multiple assumed | 30.0x |
| Company | Moat | Buy price |
| PPG Industries (PPG) | 58 | $72.98 |
| Solstice Adv Materials Inc (SOLS) | 16 | $19.32 |
| Axalta Coating Systems Ltd (AXTA) | 66 | $27.76 |
| Hawkins Inc (HWKN) | 93 | $73.94 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of International Flavors & Fragrances rather than accepting ours.