Philip Morris: Up 60%+ in the Past Year; Further Gains Likely
Company Update (PM US) (Buy): PM Is the structural winner in Tobacco and EPS is growing at ~10%, but P/E is still ~20x.
Highlights
Total volume grew for the 4th year in a row, and EBIT grew 10% in Dollars.
Heated Tobacco continues to gain share, and ZYN grew 42% in the U.S.
Adjusted EPS expected to grow 10.5-12.5% ex-FX in 2025, 7-9% in dollars.
Shares are at 20.3x 2025 guided EPS, and Dividend Yield is 3.7%.
At $144.41, we see 67% total return (15.0% IRR) by 2028 year-end. Buy.
Introduction
We review our Buy rating on Philip Morris (“PM”) after Q4 2024 results were released last Thursday (February 6). PM shares rose 11.0% that day and are now up 60.5% in the past year (in share price alone):
PM Share Price (Last 1 Year)
Source: Google Finance (09-Feb-25).
PM is currently the largest position in our “Select 15” model portfolio, having been part of the portfolio since inception at the start of 2023 and a top-5 position since September 2023. We initiated a Buy rating on PM when we first published our research on the company in June 2019, and shares have gained 120% since. PM is our largest holding in real life.
PM remains one of our highest-conviction Buys, likely to grow EPS at 10%+ annually on average, yet still trade at ~20x 2025 guided EPS; the Dividend Yield is 3.7%. PM has continued to be a structural winner ahead of Big Tobacco peers.
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