PM - Embedded Expectations Analysis - 2020 09 18
Phillip Morris International Inc. (PM:USA) currently trades near recent averages relative to UAFRS-based (Uniform) earnings, with a 16.8x Uniform P/E. At these levels, the market is pricing in expectations for profitability to remain flat, and management may have concerns about IQOS market share, cigarette down-trading, and international marketsSpecifically, management may lack confidence in their ability to continue beating their diluted EPS guidance, meet their adjusted operating margin guidance, and mitigate Marlboro share declines. In addition, they may have concerns about the coronavirus disruptions on their international markets, the sustainability of tobacco consumption recovery, and their ability to get FDA authorization for reduced-risk tobacco products. Moreover, they may lack confidence in their ability to sustain increasing reduced-risk product market share, IQOS vape efficiency improvements, and new IQOS user acquisitions
Philip Morris International is a holding company. Through its subsidiaries, the company is a tobacco company engaged in the manufacture and sale of cigarettes, smoke-free products and associated electronic devices and accessories, and other nicotine-containing products in markets outside the United States. The company's portfolio comprises international and local brands including Marlboro, which is complemented in the premium-price category by Parliament. The company's other international cigarette brands are Bond Street, Chesterfield, L&M, Lark and Philip Morris. The company also owns various local cigarette brands, such as Dji Sam Soe, Sampoerna A and Sampoerna U in Indonesia, and Fortune and Jackpot in the Philippines.
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