Valuentum Exclusive Analysis for the Discerning Investor

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Jul 24, 2023

Philip Morris’ Cash-Flow Dividend Coverage Resilient, ZYN Performance Impressive
Image Source: Philip Morris. 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.

Apr 20, 2023

Philip Morris’ First-Quarter 2023 Results Just Okay
Image: Philip Morris’ smoke-free product portfolio. Image Source: Philip Morris 2022 Form 10-K. We like that Philip Morris has raised its quarterly dividend by more than 170% since it became a public company in 2008, reflecting a compound annual growth rate of ~7.5%, and further growth in the dividend payout should ensue. The company’s Dividend Cushion ratio stands at 1.0, but the mediocre ratio is more of a function of the company’s large net debt position than anything else, as free cash flow generation remains robust. Shares of Philip Morris yield ~5% at the time of this writing.

Feb 20, 2023

Phillip Morris’ Acquisition of Swedish Match Accelerates Smoke-Free Push
Image Source: Phillip Morris. On February 9, Phillip Morris reported fourth-quarter 2022 results. The company’s performance continues to be impacted by the War in Ukraine. Net revenue growth came in at 0.6% for the quarter, while operating income fell 0.8%. However, excluding sales in Russia and Ukraine, net revenue growth advanced 7.9% in the quarter, while operating income growth advanced 10.3%, a much better showing on an adjusted basis. Smoke-free products accounted for ~36.0% of total net revenue in the period. We continue to like Phillip Morris as an income idea, with shares yielding ~5% at the time of this writing. Our fair value estimate stands at ~$105 per share.

Oct 20, 2022

Philip Morris Is One of Our Favorite High-Yielding Income Generation Ideas
Image Shown: Philip Morris International Inc expects alternative nicotine products will grow at a robust pace over the coming years, with an eye towards heated tobacco units and oral nicotine products. By capitalizing on those opportunities, the company aims to diversify its revenues away from traditional cigarette sales. Image Source: Philip Morris International Inc – 2021 Investor Day Event Presentation. Philip Morris is a strong cash flow generator with ample pricing power and a bright growth outlook. Underlying demand for its IQOS heated tobacco offerings remains robust and demand for its traditional cigarette offerings is holding up well, even in the face of substantial inflationary pressures weighing negatively on consumer spending power around the global. Philip Morris’ near term guidance indicates that it should remain a strong free cash flow generator in 2022, allowing the firm to stay on top of its payout obligations. Management remains committed to rewarding income seeking shareholders, and we continue to like exposure to shares of Philip Morris in our High Yield Dividend Newsletter portfolio.

Jul 27, 2022

High Yielding Philip Morris International’s Growth Runway Remains Intact
Image Shown: Shares of Philip Morris International moved higher in the wake of its second quarter earnings report. Philip Morris International reported second quarter 2022 earnings that beat both consensus top- and bottom-line estimates. The company raised its full-year revenue and adjusted EPS guidance for 2022 on a pro forma basis (excluding its operations in Russia and Ukraine) versus previous estimates in conjunction with its latest earnings update. Now Philip Morris International expects to generate 6%-8% net revenue growth on an organic basis and 10%-12% diluted EPS growth in 2022 versus 2021 levels (these are non-GAAP metrics). We include Philip Morris International in the High Yield Dividend Newsletter portfolio as we are big fans of its resilient business model and ample pricing power.