International Flavors & Fragrances (IFF)

Flavor and fragrance producer IFF (NYSE:IFF) announced better-than-expected revenue in Q4 CY2025, but sales fell by 6.6% year on year to $2.59 billion. The company expects the full year’s revenue to be around $10.65 billion, close to analysts’ estimates. Its non-GAAP profit of $0.80 per share was 3.8% below analysts’ consensus estimates.

Company Overview

Responsible for the scents in your favorite perfumes and the flavors in your daily snacks, International Flavors & Fragrances (NYSE:IFF) creates and manufactures ingredients for food, beverages, personal care products, and pharmaceuticals used in countless consumer goods.

Ingredients, flavors, and fragrances companies supply essential components to food, beverage, personal care, and household product manufacturers. These firms develop proprietary formulations that enhance taste, scent, and texture, creating customer stickiness through specialized expertise and regulatory-approved ingredient portfolios. Tailwinds include growing consumer demand for natural and clean-label products, expansion in emerging markets, and innovation in plant-based and functional ingredients. However, headwinds persist from volatile raw material costs, particularly for agricultural and petrochemical inputs. Regulatory scrutiny over synthetic additives and fragrance allergens poses compliance challenges, while consolidation among major customers increases pricing pressure and negotiating leverage against suppliers.

IFF competes with other major global flavor and fragrance companies including Givaudan, DSM-Firmenich, Symrise, and in certain segments with food ingredient suppliers like Kerry, Archer-Daniels-Midland (NYSE:ADM), and Novonesis.

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $10.89 billion in revenue over the past 12 months, International Flavors & Fragrances is one of the larger consumer staples companies and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when your existing brands have penetrated most of the market. To accelerate sales, International Flavors & Fragrances likely needs to optimize its pricing or lean into new products and international expansion.

As you can see below, International Flavors & Fragrances struggled to generate demand over the last three years. Its sales dropped by 4.3% annually, a rough starting point for our analysis.

This quarter, International Flavors & Fragrances’s revenue fell by 6.6% year on year to $2.59 billion but beat Wall Street’s estimates by 2.9%.

Looking ahead, sell-side analysts expect revenue to decline by 2.7% over the next 12 months. it’s hard to get excited about a company that is struggling with demand.

International Flavors & Fragrances has good unit economics for a consumer staples company, giving it the opportunity to invest in areas such as marketing and talent to stay competitive. As you can see below, it averaged an impressive 36% gross margin over the last two years. Said differently, International Flavors & Fragrances paid its suppliers $63.97 for every $100 in revenue.

International Flavors & Fragrances’s gross profit margin came in at 34.4% this quarter, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

International Flavors & Fragrances was profitable over the last two years but held back by its large cost base. Its average operating margin of 1.7% was weak for a consumer staples business. This result is surprising given its high gross margin as a starting point.

Analyzing the trend in its profitability, International Flavors & Fragrances’s operating margin decreased by 10.2 percentage points over the last year. International Flavors & Fragrances’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, International Flavors & Fragrances generated an operating margin profit margin of 3.7%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for International Flavors & Fragrances, its EPS declined by 8.9% annually over the last three years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

In Q4, International Flavors & Fragrances reported adjusted EPS of $0.80, down from $0.97 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects International Flavors & Fragrances’s full-year EPS of $4.20 to grow 5.7%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

International Flavors & Fragrances has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.7%, subpar for a consumer staples business.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

International Flavors & Fragrances’s five-year average ROIC was negative 2.5%, meaning management lost money while trying to expand the business. Its returns were among the worst in the consumer staples sector.

We enjoyed seeing International Flavors & Fragrances beat analysts’ organic revenue expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed and its gross margin fell short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock remained flat at $76.22 immediately after reporting.

Updated: February 12, 2026 at 12:10 AM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own International Flavors & Fragrances, you should also grasp the company’s longer-term business quality and valuation.

International Flavors & Fragrances doesn’t pass our quality test. To begin with, its revenue has declined over the last three years. While its favorable brand awareness gives it meaningful influence over consumers’ dining decisions, the downside is its declining operating margin shows the business has become less efficient. On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

International Flavors & Fragrances’s P/E ratio based on the next 12 months is 17.6x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $82.91 on the company (compared to the current share price of $77.57).