Philip Morris International PM
What does Philip Morris International do?
Philip Morris International is a globally active tobacco and nicotine company headquartered in the United States. The company sells cigarettes outside the U.S. home market and still generates a significant share of its revenue there. This includes international brands sold in numerous countries. In addition, there are profits from accessories such as lighters and matches, as well as wellness products.
Strategically, the company is focusing on smoke-free products. These include heated tobacco products under the IQOS brand, e-cigarettes under VEEV and nicotine pouches under the ZYN brand. Customers are adult smokers, who are supplied through retailers and wholesalers. In terms of competition, the company mainly faces British American Tobacco, Japan Tobacco and Imperial Brands. Its position is supported by strong brands, a broad distribution network, high regulatory barriers to entry and substantial investment in research and product approvals for smoke-free alternatives.
Score profile
Rank vs. Consumer Defensive (99 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Philip Morris International ranks above average in the group Consumer Defensive (7.7/10). On growth, the company ranks in the middle in the group Consumer Defensive (4.8/10). On valuation (higher = cheaper), the stock ranks in the bottom fifth in the group Consumer Defensive (1.9/10). On financial strength, Philip Morris International ranks in the middle in the group Consumer Defensive (5.6/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 21.5x | 14.9x | better than 24 % |
| Trailing P/E | 28.4x | 21.2x | better than 38 % |
| PEG ratio | 2.6x | 1.8x | better than 32 % |
| EV/EBITDA | 17.1x | 11.2x | better than 15 % |
| Price/sales | 7.0x | 1.2x | better than 4 % |
| Revenue growth | 5.5% | 2.1% | better than 69 % |
| Earnings growth | -4.8% | 3.3% | better than 27 % |
| Gross margin | 67.7% | 37.2% | better than 94 % |
| Operating margin | 41.9% | 11.2% | better than 98 % |
| Net margin | 24.8% | 4.3% | better than 97 % |
| Return on equity | 0.0% | 10.6% | better than 19 % |
| Debt/equity | 0.0% | 75.2% | better than 97 % |
| Current ratio | 1.0x | 1.3x | better than 33 % |
| Free cash flow yield | 3.8% | 4.6% | better than 38 % |
| Dividend yield | 3.3% | 3.1% | – |
| Payout ratio | 87.7% | 63.4% | – |
| Beta | 0.35 | 0.52 | – |
Valuation: what is Philip Morris International worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Philip Morris International a model range of 118.55 USD to 233.29 USD per share.
15 analysts, average rating “Buy”, average price target 213.27 USD (+9.7%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Pricing power in cigarettes offsets declining sales volumes and supports revenue and earnings over long periods.
- The expansion of smoke-free products such as IQOS and ZYN increases the share of high-margin revenue in the overall business.
- Strong cash flows from the established cigarette business finance investments, dividends and the transition to new product categories.
Risks
- Stricter regulation, higher tobacco taxes, advertising bans and flavor bans can permanently weigh on sales and margins.
- The long-term decline in cigarette consumption puts pressure on the core business if smoke-free products do not offset the decrease.
- Currency fluctuations and litigation have a strong impact, as the company generates its revenue predominantly outside the United States.
What to look for with Philip Morris International
The share of revenue from smoke-free products is particularly informative because it shows how far the company has already moved away from the traditional cigarette.