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1. Company Snapshot

1.a. Company Description

Philip Morris International Inc.operates as a tobacco company working to delivers a smoke-free future and evolving portfolio for the long-term to include products outside of the tobacco and nicotine sector.The company's product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor, and oral nicotine products that are sold in markets outside the United States.


The company offers its smoke-free products under the HEETS, HEETS Creations, HEETS Dimensions, HEETS Marlboro, HEETS FROM MARLBORO, Marlboro Dimensions, Marlboro HeatSticks, Parliament HeatSticks, and TEREA brands, as well as the KT&G-licensed brands, Fiit, and Miix.It also sells its products under the Marlboro, Parliament, Bond Street, Chesterfield, L&M, Lark, and Philip Morris brands.In addition, the company owns various cigarette brands, such as Dji Sam Soe, Sampoerna A, and Sampoerna U in Indonesia; and Fortune and Jackpot in the Philippines.


The company sells its smoke-free products in 71 markets.Philip Morris International Inc.was incorporated in 1987 and is headquartered in New York, New York.

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1.b. Last Insights on PM

Philip Morris International's recent performance was negatively impacted by a revenue miss in the second quarter, driven by a decline in cigarette sales and lower-than-expected shipments of its ZYN nicotine pouches. The company's premium valuation and cigarette declines also urge cautious investment moves. Additionally, Philip Morris' smoke-free growth, while strong, is not enough to offset the decline in traditional cigarette volumes. The company's cost-cutting efforts, aiming to capture $2 billion in savings by 2026, are on track, but the recent earnings miss and premium valuation may limit further upside.

1.c. Company Highlights

2. Philip Morris International's Q3 2025 Earnings: Strong Performance Driven by Smoke-Free Business

Philip Morris International (PMI) reported a robust Q3 2025 performance, driven by its global smoke-free business. The company's financial highlights include organic top-line growth of 5.9%, or 7.3% excluding the Indonesia technical impact, and adjusted operating income (OI) growth of 7.5% organically and 12.4% in dollar terms to $4.7 billion. Adjusted diluted EPS grew 17.3% to a record $2.24, surpassing analyst estimates of $2.09. The adjusted OI margin expanded by 120 basis points, and the smoke-free gross profit reached over $3 billion.

Publication Date: Oct -21

📋 Highlights
  • Smoke-free business growth: Q3 gross profit exceeded $3 billion, with adjusted OI margin at 43.1% (highest in 4 years).
  • ZYN expansion: $100M invested in US relaunch; 36% global shipment growth, 37% US can growth, and 40%+ category growth in 18 months.
  • EPS record: Adjusted diluted EPS rose 17.3% to $2.24, driven by 12.4% adjusted OI growth to $4.7 billion.
  • Market leadership: IQOS HTU shipments grew 15.5%, while Marlboro gained 0.4 share points to reach 10.9% (historic high).

Business Segment Performance

Shipment volumes grew 0.7% in Q3, or 1.8% year-to-date, driven by IQOS HTU shipments, which grew 15.5% to 41 billion units, and ZYN can shipments, which grew 36% globally, with 37% growth in the US. Cigarette volumes declined 3.2% in Q3. The company's smoke-free business is outpacing the industry in 100 markets, with over 12% estimated IMS volume growth year-to-date. As per the management, "PMI's smoke-free business is outpacing the industry in 100 markets, with over 12% estimated IMS volume growth year-to-date."

Growth Prospects and Investments

PMI is on track for another year of double-digit adjusted operating income and earnings per share growth in currency-neutral terms. The company expects to deliver its target of gross margin expansion organically and in dollar terms for the year. PMI invested around $100 million in Q3 to relaunch its ZYN nicotine pouch brand in the US, resulting in a substantial increase in brand perception and repurchase intent. The US nicotine pouch category has been growing over 40% in the last 18 months, with ZYN being the number one smoke-free brand by value in the US.

Valuation and Outlook

With a P/E Ratio of 27.48 and an EV/EBITDA of 15.63, the market appears to have priced in PMI's strong growth prospects. The company's Dividend Yield stands at 3.63%, reflecting its commitment to returning value to shareholders. Analysts estimate next year's revenue growth at 8.1%. PMI's financial model is built on strengths across all categories, complemented by proactive measures on pricing and cost efficiencies, driving confidence in strong and sustainable adjusted diluted EPS growth.

Guidance and Future Expectations

For Q4, PMI expects a continued strong performance from its smoke-free business, with an acceleration in growth. However, the company forecasts a 20-30 million can inventory reduction in the coming months, which will impact shipment volume growth. Despite this, PMI expects double-digit growth in adjusted operating income and adjusted diluted earnings per share for the full year. The company has raised its full-year dollar EPS growth guidance, driven by better views on tax rate and interest costs.

3. NewsRoom

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FERRARI RENEWS ITS PARTNERSHIP WITH PHILIP MORRIS INTERNATIONAL

Dec -03

Source: globenewswire.com

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Philip Morris International Expands its Partnership with Scuderia Ferrari HP, Launching a Bold New Chapter in Their Long-Standing Relationship

Dec -03

Source: businesswire.com

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Touchstone Value Fund Q3 2025 Portfolio Update

Dec -03

Source: seekingalpha.com

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Philip Morris International Inc. (PM) Presents at Morgan Stanley Global Consumer & Retail Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

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Philip Morris International Presents at 2025 Morgan Stanley Global Consumer & Retail Conference

Dec -02

Source: businesswire.com

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8 'Safer' Dividend Buys In Barron's 23 Better November Bets Than T-Bills

Nov -28

Source: seekingalpha.com

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8 Dividend Stocks Every Investor Should Consider

Nov -28

Source: fool.com

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MO vs. PM: Which Tobacco Giant Is Winning the Smoke-Free Race?

Nov -27

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.90%)

6. Segments

Europe

Expected Growth: 6.5%

Europe's mature market and regulatory pressures may slow growth. However, the shift towards alternative nicotine products could drive revenue. A growth rate slightly below the global average is expected due to these balancing factors.

SSEA, CIS & MEA

Expected Growth: 8.5%

Emerging markets within this segment offer higher growth potential due to increasing consumer demand. However, this is somewhat offset by potential regulatory hurdles and public health initiatives. The expected growth rate is above the global average, reflecting the segment's mixed but overall positive outlook.

EA, AU & PMI GTR

Expected Growth: 7.0%

The diverse nature of this segment, with both mature and growing markets, results in a growth rate near the global average. While there are challenges, particularly in regulated markets like Australia, the global travel retail component adds a layer of potential growth tied to the recovery of international travel.

Americas

Expected Growth: 6.0%

The segment faces significant regulatory pressures and declining cigarette sales. While there's potential for growth in alternative nicotine products, the overall growth rate is expected to be below the global average due to these challenges.

Wellness and Healthcare

Expected Growth: 10.0%

The wellness and healthcare segment is poised for significant growth as it represents a new frontier for Philip Morris International. Investments in this area are expected to yield high returns as the company diversifies its portfolio and taps into the growing demand for health and wellness products.

7. Detailed Products

Marlboro

A premium cigarette brand offering a range of flavor profiles and nicotine levels

Chesterfield

A mid-range cigarette brand offering a smooth, balanced taste

L&M

A value cigarette brand offering a range of flavor profiles at an affordable price

iQOS

A heat-not-burn tobacco product offering a smoke-free alternative to cigarettes

HEETS

Tobacco sticks designed for use with iQOS, offering a range of flavor profiles

Marlboro HeatSticks

Tobacco sticks designed for use with iQOS, offering a range of flavor profiles under the Marlboro brand

8. Philip Morris International Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Philip Morris International Inc. faces moderate threat from substitutes, as consumers have limited alternatives to traditional tobacco products. However, the growing popularity of e-cigarettes and heat-not-burn products poses a threat to the company's traditional cigarette business.

Bargaining Power Of Customers

Philip Morris International Inc. has a large customer base, but individual customers have limited bargaining power due to the addictive nature of tobacco products. Additionally, the company's strong brand portfolio and wide distribution network reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Philip Morris International Inc. has a diversified supplier base, and no single supplier has significant bargaining power. The company's large scale of operations and long-term contracts with suppliers also reduce the bargaining power of suppliers.

Threat Of New Entrants

The tobacco industry has high barriers to entry, including significant regulatory hurdles, high capital requirements, and established distribution networks. These barriers make it difficult for new entrants to compete with established players like Philip Morris International Inc.

Intensity Of Rivalry

The tobacco industry is highly competitive, with several large players competing for market share. Philip Morris International Inc. faces intense competition from other major tobacco companies, such as Altria Group and British American Tobacco, as well as from smaller players and new entrants in the e-cigarette and heat-not-burn markets.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 130.60%
Debt Cost 4.24%
Equity Weight -30.60%
Equity Cost 6.99%
WACC 3.40%
Leverage -426.81%

11. Quality Control: Philip Morris International Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Altria

A-Score: 8.0/10

Value: 6.8

Growth: 5.8

Quality: 7.5

Yield: 10.0

Momentum: 8.5

Volatility: 9.7

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Imperial Brands

A-Score: 7.7/10

Value: 5.8

Growth: 5.3

Quality: 6.3

Yield: 9.4

Momentum: 9.5

Volatility: 9.7

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Universal

A-Score: 7.2/10

Value: 7.8

Growth: 5.9

Quality: 4.0

Yield: 10.0

Momentum: 7.0

Volatility: 8.7

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Philip Morris

A-Score: 6.8/10

Value: 4.3

Growth: 4.1

Quality: 7.1

Yield: 8.0

Momentum: 8.5

Volatility: 9.0

1-Year Total Return ->

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BAT

A-Score: 6.8/10

Value: 3.4

Growth: 3.6

Quality: 5.9

Yield: 9.4

Momentum: 9.5

Volatility: 9.0

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Scandinavian Tobacco Group

A-Score: 6.1/10

Value: 8.1

Growth: 4.0

Quality: 5.3

Yield: 9.4

Momentum: 1.5

Volatility: 8.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

148.58$

Current Price

148.58$

Potential

-0.00%

Expected Cash-Flows