Philip Morris International Inc.

Date: March 02, 2024.

Company’s Overview

Philip Morris (PM), a global tobacco giant, operates beyond just cigarettes. They’re in over 180 countries, selling a range of tobacco and smoke-free products. Marlboro cigarettes, but also heated tobacco devices, e-cigarettes, and even oral smokeless options. Their focus is on both traditional tobacco and alternative smoke-free solutions, aiming to cater to diverse preferences while navigating a changing industry.

Competition

Revenue Segments

The Company’s net sales proportions by segment for the most recent quarterly report are composed by:

Related Risks

Philip Morris isn’t just smoking cigars, they’re dodging smoke rings of risk! From stricter anti-smoking laws and changing consumer preferences to fierce competition and public health concerns, their lungs are full. Even their reliance on cigarettes, legal battles, and negative PR add heat. But Philip Morris isn’t just coughing nervously. They’re puffing out smoke-free alternatives, playing by the rules, and engaging with everyone. New tech, changing regulations, and emerging markets are also on their radar.

Philip Morris is managing the risks from stricter anti-smoking laws and changing tastes to competition and bad PR, they’re feeling the heat. But they’re not just coughing nervously. They’re puffing out smoke-free alternatives, playing fair, and talking to everyone. New tech, changing rules, and new markets add smoke to the mix.

Financial Analysis

Company’s Revenues

Revenues from 2020 to last quarter report:

• Philip Morris revenue for the quarter ending September 30, 2023 was $9.141B, a 13.81% increase year-over-year.
• Philip Morris revenue for the twelve months ending September 30, 2023 was $34.279B, a 8.09% increase year-over-year.
• Philip Morris annual revenue for 2022 was $31.762B, a 1.14% increase from 2021.
• Philip Morris annual revenue for 2021 was $31.405B, a 9.45% increase from 2020.
• Philip Morris annual revenue for 2020 was $28.694B, a 3.73% decline from 2019.

The yearly revenues from 2010 till 2023 are:

**The 2024 and 2025 values are the expected by the analysts

Company’s Net Income

Net Income from 2020 to last quarter report:

• Philip Morris net income for the quarter ending September 30, 2023 was $2.048B, a 1.63% decline year-over-year.
• Philip Morris net income for the twelve months ending September 30, 2023 was $7.992B, a 8.26% decline year-over-year.
• Philip Morris annual net income for 2022 was $9.024B, a 0.65% decline from 2021.
• Philip Morris annual net income for 2021 was $9.083B, a 13.03% increase from 2020.
• Philip Morris annual net income for 2020 was $8.036B, a 12.11% increase from 2019.

The yearly net income from 2010 till 2023 is:

**The 2024 and 2025 values are the expected by the analysts

Company’s EPS

EPS from 2021 to last quarter report:

• Philip Morris EPS for the quarter ending September 30, 2023 was $1.32, a 1.49% decline year-over-year.
• Philip Morris EPS for the twelve months ending September 30, 2023 was $5.15, a 8.2% decline year-over-year.
• Philip Morris 2022 annual EPS was $5.81, a 0.34% decline from 2021.
• Philip Morris 2021 annual EPS was $5.83, a 12.98% increase from 2020.
• Philip Morris 2020 annual EPS was $5.16, a 11.93% increase from 2019.

Company’s Free Cash Flow

Free Cash Flow from 2021 to 2023:

• Philip Morris annual free cash flow for 2022 was $9.726B, a 13.31% decline from 2021.
• Philip Morris annual free cash flow for 2021 was $11.219B, a 21.81% increase from 2020.
• Philip Morris annual free cash flow for 2020 was $9.21B, a 0.3% decline from 2019.

The yearly free cash flow from 2010 till 2023 is:

**The 2024 and 2025 values are the expected by the analysts

Quarterly Reports

The Company’s quarterly results from Q1 2018 till its most recent quarter:

Shares Outstanding

On June 11, 2021, its Board of Directors authorised a new share repurchase program of up to $7 billion, with target spending of $5 billion to $7 billion over a three-year period.

On July 22, 2021, the Company began repurchasing shares under this new share repurchase program. From July 22, 2021 through March 31, 2022, it repurchased 10.5 million shares of its common stock at a cost of approximately $1.0 billion.

During the first three months of 2022, it repurchased 2.0 million shares of its common stock at a cost of $199 million.

Asset/Liabilities & Current Ratio

Philip Morris’s financial ratios paint a picture of cautious stability. Their asset-to-liability ratio of 0.87 suggests assets fall slightly below liabilities, indicating a moderate debt burden. This allows for some financial flexibility but also implies less room for manoeuvre compared to companies with higher ratios.

However, the current ratio of 0.75 raises a potential concern. This means current assets only cover 75% of current liabilities, implying potential challenges meeting short-term obligations like debts and payables.

Valuation

Based on DCF analysis, PM’s stock price is overvalued. Note that in the analysis we take into consideration also the cash and cash equivalents and the total debt.

According to the analysts, the consensus rating for Philip Morris stock is Overweight based on the current 10 buy ratings, 1 hold and 1 sell rating.

While Philip Morris boasts impressive revenue and net income generation, the stock’s current valuation gives me pause. The overvalued price, coupled with my concerns about their liquidity ratios (particularly the current ratio), makes me hesitate.

They’re certainly not sitting still, actively diversifying into smoke-free alternatives and managing debt, but the question remains — is the current price reflecting their true potential considering these concerns and the significant portion of free cash flow allocated to dividends?

Personally, I’d advise further research into their growth plans, industry trends, and alternative investment options before making a decision.

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Disclaimer

Please note that I am not a licensed financial advisor and the information provided here should not be construed as financial advice. I am simply sharing my understanding of the topics based on my research and personal experiences. It is always advisable to consult with a qualified financial advisor before making any investment decisions.

The information I provide is based on publicly available sources and my own interpretations. I strive to provide accurate and up-to-date information, but I cannot guarantee the correctness or completeness of the information.

Any opinions expressed here are my own and do not necessarily reflect the views of any other individual or organisation.

Please use your own judgement and conduct your own research before making any investment decisions.