Core Viewpoint - The current stock market is heavily focused on artificial intelligence, semiconductors, and cryptocurrency, suggesting a need for diversification in investment portfolios [1] Company Overview - Philip Morris International (PM) is a global leader in the nicotine market, with a dividend yield exceeding 4% and a strong balance sheet, positioning it for double-digit earnings per share (EPS) growth in the future [3][10] Market Position - Philip Morris International has a diverse portfolio of cigarette brands, including Marlboro and Chesterfield, and operates in nearly every country except China and the U.S. [4] - The company experienced a 1.3% year-over-year growth in cigarette volumes last quarter, contrasting with Altria Group's 8.6% decline [5] New Product Development - The company has invested significantly in the new-age nicotine market, acquiring leading products like the IQOS heat-not-burn device and Zyn nicotine pouches [6] - Smoke-free revenue grew by 16.8% year-over-year, now accounting for 38% of total revenue, indicating a strong growth trajectory for these products [7] Revenue Growth - Overall revenue for Philip Morris International increased by 11% year-over-year, despite a supply shortage of Zyn nicotine pouches, which affected market share [8] - Management anticipates that resolving the Zyn supply shortage will lead to accelerated revenue growth [9] Dividend and Cash Flow - The company currently pays a dividend of $5.25 per share, supported by $6.46 in free cash flow per share, indicating sustainable dividend growth potential [10] - Expectations for increasing free cash flow suggest that the company will have more capacity to raise dividends in the future, enhancing investor income [11] Investment Recommendation - With a strong market position in safer nicotine products and a solid dividend yield, Philip Morris International is recommended as a long-term investment during the transition from traditional cigarettes [12]

Investment Rating - The report assigns a "Buy" rating with a target price of $150.00, indicating a potential upside of 23.4% from the current price of $121.59 [4][5][139]. Core Insights - Philip Morris International (PMI) is transitioning towards a "smoke-free future" with a strong focus on reduced-risk products (RRPs) such as heated tobacco and nicotine pouches, which are expected to drive future growth [2][3][137]. - The company's flagship heated tobacco product, IQOS, has established a dominant market position globally, particularly in Japan and Europe, and is set to expand further into the U.S. market [2][3][137]. - PMI's revenue from RRPs has significantly increased, contributing approximately 35.6% to total revenue as of 2023, with expectations for continued growth [25][133][138]. Summary by Sections Company Overview - PMI is a leading global tobacco company with a strong market presence in approximately 175 countries, primarily known for its Marlboro brand [1][8]. - The company has shifted its strategy to focus on low-risk products in response to declining smoking rates and increasing health awareness [7][9]. Financial Performance - PMI's revenue for 2022 was $31.76 billion, with projections for 2024-2026 showing growth to $37.86 billion, $40.38 billion, and $43.08 billion respectively [6][141]. - The company reported a net profit of $9.05 billion in 2022, with forecasts indicating growth to $9.83 billion in 2024 and $11.61 billion by 2026 [6][141]. Product Development - PMI has successfully diversified its product portfolio to include a range of non-combustible products, with heated tobacco products and nicotine pouches gaining significant traction [3][25][138]. - The acquisition of Swedish Match and its ZYN brand has positioned PMI as a leader in the nicotine pouch market, with ZYN's sales volume increasing by 55.8% year-over-year [3][138][129]. Market Position - PMI holds a leading market share in the global tobacco industry, with a 28.3% share in the heated tobacco segment and a strong presence in both traditional and emerging markets [15][12]. - The company's IQOS brand commands a 71% market share in the heated tobacco category, reinforcing its competitive advantage [72][72]. Future Outlook - The report anticipates continued growth in PMI's RRP segment, particularly in the U.S. market, following the resolution of legal disputes and the expansion of its product offerings [137][138]. - PMI's commitment to innovation and market expansion is expected to enhance its revenue streams and shareholder returns in the coming years [138][139].

Core Insights - Philip Morris International Inc. is making significant progress towards a smoke-free future, supported by a strong pricing strategy, innovative smoke-free products, and disciplined cost-saving measures [1] Pricing Power Driving PM's Performance - The company's strong pricing power has been a crucial factor in driving revenue and operating income growth, with net revenues reaching $9,911 million, an increase of 8.4% on a reported basis and 11.6% on an organic basis in Q3 2024 [2] - The growth in organic revenues was primarily due to positive pricing variance and favorable volume/mix, particularly from increased smoke-free product volumes [2] PM's Smoke-Free Transformation in Full Swing - Smoke-free products accounted for 38% of the company's net revenues in Q3 2024, highlighting the success of the IQOS heat-not-burn device [3] - The company aims to generate over two-thirds of its revenues from smoke-free products by 2030 [3] Strategic Initiatives and Partnerships - Philip Morris became the majority owner of Swedish Match on November 11, 2022, which has performed well due to its ZYN product [4] - A long-term partnership with KT&G was established on January 30, 2023, to commercialize innovative smoke-free devices outside South Korea [4] - Smoke-free revenues for 2024 are projected to increase by double digits organically, nearing $15 billion [4] Focus on Cost-Saving Initiatives - The company has implemented significant cost-saving measures, achieving an organic adjusted operating margin expansion of 90 basis points in Q3 2024, driven by an 80-basis-point increase in gross margin [5] - Cumulative gross cost efficiencies reached $490 million year-to-date, with a target of $2 billion in savings by 2026 [5] Currency and Regulatory Challenges - Philip Morris' Q3 2024 performance was impacted by currency fluctuations, particularly with the Egyptian Pound and Argentine Peso, leading to a 6-cent currency impact on adjusted diluted EPS [6] - The company anticipates an ongoing unfavorable currency impact of 40 cents for the full year, alongside challenges from strict government regulations [6] Final Thoughts on PM Stock - The company's strong fundamentals and commitment to innovation position it well for sustained growth, despite challenges from regulatory restrictions and currency headwinds [7] - Philip Morris shares have increased by 11.7% over the past six months, outperforming the industry growth of 10.5% [8]

Group 1: Exxon Mobil - Exxon Mobil is a global leader in energy, benefiting from steady demand and robust cash flow, even in uncertain markets [2] - The company offers a strong dividend yield of 3.8%, providing an attractive income stream [2] - Currently, Exxon Mobil trades at 13.3x forward earnings, which is below its 10-year median of 17.7x [11] Group 2: Philip Morris International - Philip Morris is recognized as a consumer staple, with consistent demand for its products [3] - The company has a generous dividend yield of 4.4% and is trading at 19.1x forward earnings, slightly above its 10-year median of 16.5x [7] - Philip Morris's transition to smokeless products has reignited its growth trajectory, with EPS projected to increase by 8.3% this year and 10.6% next year [7] Group 3: AT&T - AT&T combines a reliable telecommunications business with a generous dividend yield of 4.9%, making it a strong defensive play [8] - The stock has recently reached new record highs after nearly seven years of zero stock appreciation [8] - AT&T is trading at a one-year forward earnings multiple of 10.4x, just above its 10-year median of 9.4x [9] Group 4: Market Context - The current market environment shows signs of increased volatility, prompting investors to consider more defensive stocks [4][10] - The Fed's recent adjustments in interest rate policy expectations have contributed to a rise in market volatility [10] - Despite the volatility, high-yield, steady-performing stocks like Exxon Mobil, Philip Morris, and AT&T can help maintain stability and income [9]

Company Overview - Philip Morris International Inc. is a multinational tobacco company with a market capitalization of $200 billion, making it the largest publicly traded tobacco company globally [2]. Financial Performance - The company offers a dividend yield of over 4%, indicating a strong return for investors [2]. Investment Strategy - The Value Portfolio focuses on building retirement portfolios through a fact-based research strategy, which includes thorough analysis of 10Ks, analyst commentary, market reports, and investor presentations [2].

Core Points - The Ministry of the Interior and Safety in Korea is collaborating with Philip Morris Korea to support households in crisis by including informative messages on product packaging [1][2] - The initiative aims to guide individuals facing social and economic difficulties to the Health and Welfare Counseling Center or local government offices for assistance [2] - This collaboration marks a first in the tobacco industry, following a previous agreement signed in July [2] Product Information - The products that will feature the informative messages include TEREA Purple Wave, TEREA Blue (Heated Tobacco Sticks), Marlboro Gold, and Marlboro Red (Regular Cigarettes) [3] - Starting January next year, the initiative will expand to include all 50 products from Philip Morris Korea [3] - Informative messages are also being broadcasted on digital advertising boards in 1,400 convenience stores nationwide to enhance consumer awareness [3] Statements from Officials - Koo Bon-geun, Head of the Smart Welfare Safety Community Promotion Team, emphasized the importance of publicity in addressing welfare blind spots and indicated plans for further cooperation with various companies [4] - A representative from Philip Morris Korea highlighted the significance of using their products to raise social awareness about crisis households and expressed commitment to supporting those in need [4]

Core Insights - The analysis focuses on Philip Morris International (NYSE: PM) and highlights the broader market's perceived overvaluation while still presenting compelling investment opportunities [1] Company Overview - Philip Morris International is positioned as a long-term investment opportunity, particularly for those seeking safe and growing dividends [1] - The company is part of a market that, despite being overvalued by conventional metrics, still offers potential for risk-adjusted returns [1] Analyst Background - The analyst has a decade of experience in investment banking, specializing in equity and real estate markets, with a focus on identifying long-only investment opportunities [1] - The analyst has a strong background in economics and applied mathematics, which supports their ability to analyze market trends and investment strategies [1] Investment Strategy - The investment strategy emphasizes correlation across asset classes and sectors, aiming to enhance portfolio performance [1] - The analyst's experience includes sourcing over $100 million in commercial real estate investments, indicating a robust understanding of investment dynamics [1]

Core Viewpoint - Philip Morris reported strong Q3 2024 earnings, with adjusted EPS of $1.91, a 14.4% year-over-year increase, exceeding estimates. The company anticipates continued growth in 2024, driven by pricing and volume improvements in both combustible and smoke-free products [2][12]. Financial Performance - Adjusted EPS for Q3 2024 was $1.91, up 14.4% year-over-year, and 18% excluding currency effects, beating the Zacks Consensus Estimate of $1.83 [2] - Net revenues reached $9,911 million, an increase of 8.4% on a reported basis and 11.6% organically, surpassing the Zacks Consensus Estimate of $9,571 million [2][3] - Adjusted operating income rose 11.2% to $4,153 million, with an adjusted operating margin of 41.9%, up 1.1 percentage points [5] Product Segmentation - Revenues from combustible products increased 5.2%, while smoke-free business revenues grew 14.2%, accounting for 38% of total revenues [4] - Total shipment volumes increased 2.9% to 203 billion units in Q3, with notable growth in smoke-free product volumes driven by IQOS and ZYN [4] Regional Performance - European region net revenues grew 8.7% organically to $4,121 million, with total shipment volumes increasing 2.5% [6] - SSEA, CIS & MEA regions saw a 12.1% organic revenue increase to $2,964 million, with shipment volumes rising 3.2% [6] - Americas region revenues surged 30.5% organically to $1,148 million, despite a 1.1% decline in total shipment volumes [7] Strategic Developments - Philip Morris announced the sale of its subsidiary Vectura Group Ltd. to Molex Asia Holdings Ltd., expected to conclude by the end of 2024 [8] - The company raised its quarterly dividend by 3.8% to $1.35 per share but will not engage in share repurchases in 2024 [11] Future Outlook - For 2024, adjusted EPS is projected in the range of $6.45-$6.51, indicating 7.3-8.3% growth, with net revenues expected to increase 9.5% organically [12][14] - Management anticipates operating cash flow of around $11 billion and capital expenditures of $1.4 billion, including investments in ZYN [14] - The total international industry volume for cigarettes and HTUs is expected to grow up to 1% in 2024, with Philip Morris projecting a 2-3% rise in its shipment volumes [13]

Core Viewpoint - Philip Morris International Inc. has experienced a significant stock surge of 30.1% over the past six months, driven by its successful transition to the smoke-free market amid increasing health awareness and stricter anti-smoking regulations [1][2]. Group 1: Stock Performance - Philip Morris' stock performance has outpaced its peers, including Altria Group and British American Tobacco, which saw gains of 20.9% and 17.9%, respectively [2]. - The company's stock is currently trading at $130.39, approaching its 52-week high of $134.15, indicating strong upward momentum and positive market sentiment [5]. - Philip Morris has surpassed the Zacks Consumer Staples sector, which declined by 2.6%, and the S&P 500, which grew by 11% during the same period [2]. Group 2: Business Transformation - The smoke-free products segment has shown exceptional performance, with net revenues increasing by 16.8% organically and gross profit rising by 20.2% in Q3 2024 [8][9]. - The IQOS brand, a leading heat-not-burn device, generated over $10 billion in annual net revenues and is expanding globally, particularly in key markets like Japan and Europe [10]. - Philip Morris aims to have its smoke-free products available in 100 markets by 2025, currently reaching 92 markets [11]. Group 3: Financial Performance and Projections - The company has implemented cost-saving measures, achieving cumulative gross cost efficiencies of $490 million year-to-date, with a target of $2 billion in savings by 2026 [13]. - For 2024, Philip Morris expects net revenues to increase by 9.5% on an organic basis, with adjusted earnings per share projected to range between $6.45 and $6.51, reflecting a growth of 7.3% to 8.3% [14][15]. - Analysts have positively revised their earnings estimates, with the consensus for the current fiscal year set at $6.51 per share [16]. Group 4: Market Challenges - Philip Morris faces challenges such as regulatory pressures in markets where traditional tobacco products are still prevalent, which could hinder the growth of its smoke-free products [21]. - Currency volatility has negatively impacted the company's quarterly adjusted EPS and is projected to have a full-year adverse impact [22]. - The current market valuation of Philip Morris is higher than its industry peers, with a forward price-to-sales ratio of 5.09 compared to the industry average of 3.99, indicating potential overvaluation concerns [20].

This company is making all the right moves and running laps around the competition.Investors love dividends for their durability and stability during volatile markets. As anyone who has paid attention to the last five years is aware, we have seen quite volatile markets (both upward and downward). Steady dividend payments can help you weather the volatility storm.But what's an investor to do when the S&P 500 only pays an average dividend that yields 1.32%? That is not much annual income and significantly wor ...