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Philip Morris’ Cash-Flow Dividend Coverage Resilient, ZYN Performance Impressive

publication date: Jul 24, 2023
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Our fair value estimate for Philip Morris stands at $105 per share, and we don’t expect to make any material changes to our valuation of the company following the quarterly report. Philip Morris’ combustible tobacco revenue continues to be strengthened by pricing power, while its smoke-free momentum, particularly with ZYN, continues. Though adjusted financial measures continue to look good at Philip Morris, more and more we’re paying closer attention to reported diluted earnings per share, which will face material pressure in 2023 ($5.36-$5.45 per share) compared to $5.81 per share in 2022. The company’s free cash flow remains robust, but its total debt levels are not ideal, in our view. Philip Morris is trading just shy of $100 with a dividend yield of ~5.2% at the time of this writing.


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