PM - Embedded Expectations Analysis - 2018 03 12
Phillip Morris International (PM:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 21.4x Uniform P/E, implying bullish expectations for the firm. Moreover, management is confident about lower-than-expected revenue declines, outlook, and iQOSSpecifically, management is confident that total industry volume in the European Union region for cigarettes and heated tobacco units declined by 1.9% in 2017, slightly better than their forecast decline range of 2% to 3%, and that Saudi Arabia and the United Arab Emirates accounted for 60% and 20%, respectively, of the GCC cigarette industry volume prior to the 2017 tax increases. Furthermore, they are confident that that favorable inventory movements primarily reflected the establishment of appropriate distributor inventory levels of heated tobacco units, given the current high dependence on a single manufacturing center, and that they lose money on their iQOS devices currently, but for good reason
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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