Core Viewpoint - Philip Morris International Inc. is currently trading at a forward P/E multiple of 20.93X, which is significantly higher than the Zacks Tobacco industry average of 15.31X and the broader Consumer Staples sector average of 17.14X, raising questions about whether the growth justifies this premium [1][2][4]. Valuation and Performance - Philip Morris trades at a forward P/E of 20.93X, above industry and sector averages, indicating a premium valuation [7]. - Recent performance shows PM shares fell 6.4% over the past month, contrasting with gains in the Zacks Tobacco industry and the S&P 500, which advanced 0.6% and 2.5% respectively [5][4]. - Major competitors like Altria and British American Tobacco have lower forward P/E ratios of 12.12X and 11.88X, while Turning Point Brands trades at a higher multiple of 24.02X [4]. Revenue and Growth - Smoke-free products accounted for 41% of revenues in Q2, growing 15.2% year-over-year, driven by IQOS, ZYN, and VEEV [7][18]. - Despite volume declines in traditional cigarettes, PM's combustible net revenues grew 2.1% in Q2, supported by price increases [19]. - Management projects a 2% full-year decline in cigarette volume, with a sharper 3-4% drop expected in the second half [15]. Cost Efficiency and Earnings Guidance - The company achieved over $500 million in gross cost savings in the first half of the year and aims for $2 billion in efficiencies between 2024 and 2026 [20]. - Adjusted earnings per share for the last quarter were reported at $1.91, up 20% year-over-year, although impacted by currency volatility [17]. - Management raised its full-year adjusted EPS guidance to $7.43-$7.56, indicating 13-15% growth [21]. Market Sentiment and Estimates - The Zacks Consensus Estimate for earnings per share has seen upward revisions, with current estimates at $7.50 for the current year and $8.39 for the next year, reflecting year-over-year growth rates of 14.2% and 11.9% respectively [22]. - Despite challenges, the raised EPS outlook and upward estimate revisions indicate confidence in sustained earnings growth [24].
PM Stock Trades at Premium Value: Should You Buy, Hold or Sell?