PM
PM
Accumulate 2026-03-05
Model
DDM
Price at Report
$171.55
Base IV
$163.09
Bear IV
$128.46
Bull IV
$217.74
Entry Zone: 160-175 · Sell Above: 220
Bore Family Office
Valuation Report — Philip Morris International Inc. (PM) • March 5, 2026
3-Stage DDM (Ke) • Discount Rate: 6.50% • Current Price: $171.55
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Philip Morris International was spun off from Altria in 2008 to handle all non-US tobacco operations. Since then it has undergone a strategic transformation: IQOS (heat-not-burn) is the global market leader across Japan, Europe, and Southeast Asia; Zyn (oral nicotine pouches, acquired via Swedish Match in 2023) commands ~75% US market share and is growing at 40%+/yr. ~40% of net revenues are now smoke-free, targeting 2/3 by 2030. The transformation is working: PM grows revenue 7%+/yr vs. 2-3% for combustibles peers.
📊 Financial Snapshot
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | — | — | $29,625 | $29,805 | $28,694 | $31,405 | $31,762 | $35,174 | $37,878 | $40,648 |
| EBITDA ($M) | — | — | — | — | — | — | — | $12,954 | $15,189 | $16,888 |
| Operating Income ($M) | $10,815 | $11,503 | $11,377 | $10,531 | $11,668 | $12,975 | $12,246 | $11,556 | $13,402 | $14,892 |
| Net Income ($M) | $6,967 | $6,035 | $7,911 | $7,185 | $8,056 | $9,109 | $9,048 | $7,813 | $7,057 | $11,348 |
| EPS (diluted) | $4.00 | $3.00 | $4.97 | $4.61 | $5.16 | $5.83 | $5.81 | $5.02 | $4.52 | $7.26 |
| Free Cash Flow ($M) | $6,905 | $7,364 | $8,042 | $9,238 | $9,210 | $11,219 | $9,726 | $7,883 | $10,773 | $10,664 |
| Annual DPS | — | — | $4.490 | $4.620 | $4.800 | $4.960 | $5.160 | $5.220 | $5.400 | $5.540 |
| Total Debt ($M) | $25,851 | $31,334 | $26,975 | $26,656 | $28,168 | $24,783 | $34,875 | $41,243 | $42,166 | $45,134 |
| Rev YoY Growth | — | — | — | +0.6% | -3.7% | +9.4% | +1.1% | +10.7% | +7.7% | +7.3% |
📈 DDM Scenarios
$128
🔴 Bear
$163
📊 Base
$218
🚀 Bull
$171.55
Current Price
$188
Analyst Avg PT
📋 Full 10-Year Projection Tables
Bear Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $5.706 | $5.358 | $5.36 |
| Year 2 | Stage 1 | $5.877 | $5.182 | $10.54 |
| Year 3 | Stage 1 | $6.054 | $5.012 | $15.55 |
| Year 4 | Stage 1 | $6.235 | $4.847 | $20.40 |
| Year 5 | Stage 1 | $6.422 | $4.688 | $25.09 |
| Year 6 | Stage 2 | $6.564 | $4.498 | $29.58 |
| Year 7 | Stage 2 | $6.708 | $4.317 | $33.90 |
| Year 8 | Stage 2 | $6.856 | $4.142 | $38.04 |
| Year 9 | Stage 2 | $7.006 | $3.975 | $42.02 |
| Year 10 | Stage 2 | $7.161 | $3.815 | $45.83 |
| Terminal | — | TV=$155.10 | PV(TV)=$82.62 (64% of IV) |
Base Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $5.845 | $5.488 | $5.49 |
| Year 2 | Stage 1 | $6.166 | $5.436 | $10.92 |
| Year 3 | Stage 1 | $6.505 | $5.385 | $16.31 |
| Year 4 | Stage 1 | $6.863 | $5.335 | $21.64 |
| Year 5 | Stage 1 | $7.241 | $5.285 | $26.93 |
| Year 6 | Stage 2 | $7.530 | $5.161 | $32.09 |
| Year 7 | Stage 2 | $7.831 | $5.040 | $37.13 |
| Year 8 | Stage 2 | $8.145 | $4.921 | $42.05 |
| Year 9 | Stage 2 | $8.470 | $4.806 | $46.86 |
| Year 10 | Stage 2 | $8.809 | $4.693 | $51.55 |
| Terminal | — | TV=$209.37 | PV(TV)=$111.54 (68% of IV) |
Bull Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $5.983 | $5.618 | $5.62 |
| Year 2 | Stage 1 | $6.462 | $5.697 | $11.32 |
| Year 3 | Stage 1 | $6.979 | $5.777 | $17.09 |
| Year 4 | Stage 1 | $7.537 | $5.859 | $22.95 |
| Year 5 | Stage 1 | $8.140 | $5.941 | $28.89 |
| Year 6 | Stage 2 | $8.612 | $5.902 | $34.79 |
| Year 7 | Stage 2 | $9.112 | $5.863 | $40.66 |
| Year 8 | Stage 2 | $9.640 | $5.825 | $46.48 |
| Year 9 | Stage 2 | $10.199 | $5.787 | $52.27 |
| Year 10 | Stage 2 | $10.791 | $5.749 | $58.02 |
| Terminal | — | TV=$299.81 | PV(TV)=$159.72 (73% of IV) |
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 4.5% | $249 | $289 | $348 | $447 | $644 |
| 5.0% | $212 | $240 | $277 | $334 | $429 |
| 5.5% | $185 | $205 | $230 | $267 | $321 |
| 6.0% | $164 | $178 | $197 | $222 | $257 |
| 6.5% | $147 | $158 | $172 | $190 | $213 |
| 7.0% | $133 | $142 | $152 | $166 | $183 |
| 7.5% | $121 | $128 | $137 | $147 | $160 |
| 8.0% | $112 | $117 | $124 | $132 | $142 |
| 8.5% | $103 | $108 | $113 | $120 | $127 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
🏦 Comparable Valuation
| Company | Ticker | Rev Growth | P/E | FCF Yield | Smoke-Free % |
|---|---|---|---|---|---|
| Philip Morris | PM | +7.3% | 24.6x | 5.7% | ~40% |
| Altria Group | MO | +2% | 10.2x | 9.5% | ~10% |
| British American | BTI | +3% | 7.8x | 10.1% | ~15% |
| Japan Tobacco | JAPAF | +4% | 14x | 6.5% | ~30% |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $5.540 |
| Current Yield | 3.09% |
| Consecutive Growth Years | 16 |
| 1-yr DPS CAGR | +2.6% |
| 3-yr DPS CAGR | +2.0% |
| 5-yr DPS CAGR | +2.2% |
| 10-yr DPS CAGR | +2.5% |
| Payout Ratio (DPS/EPS) | 76.0% ⚠️ |
| FCF Payout Ratio | 57.0% |
| Sustainability Verdict | Safe |
Verdict: Safe. 16 consecutive years of growth since Altria spin-off (2008). FCF payout ~57%. Zyn + IQOS expanding the FCF base over time.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $5.16 | — | — | — | Actual |
| 2021 | $5.83 | — | — | — | Actual |
| 2022 | $5.81 | — | — | — | Actual |
| 2023 | $5.02 | — | — | — | Actual |
| 2024 | $4.52 | — | — | — | Actual |
| 2025 | $7.26 | — | — | — | Actual |
| 2026 | $8.00 | $8.69 | $9.20 | 9 | Estimate |
| 2027 | $8.80 | $9.40 | $10.00 | 9 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $28.7B | — | — | — | Actual |
| 2021 | $31.4B | — | — | — | Actual |
| 2022 | $31.8B | — | — | — | Actual |
| 2023 | $35.2B | — | — | — | Actual |
| 2024 | $37.9B | — | — | — | Actual |
| 2025 | $40.6B | — | — | — | Actual |
| 2026 | $43.0B | $45.2B | $47.0B | 9 | Estimate |
| 2027 | $46.0B | $48.1B | $50.0B | 9 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $188.22 | Range $166–$210
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Simon Hales | Citigroup | Strong Buy | $210 | +22.4% |
| Gerald Pascarelli | Needham | Strong Buy | $205 | +19.5% |
| Jared Dinges | JP Morgan | Buy | $185 | +7.8% |
| Gaurav Jain | Barclays | Buy | $180 | +4.9% |
| Edward Mundy | Jefferies | Hold | $180 | +4.9% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q1 2025 | $1.57 vs $1.53 | +$0.04 ✅ | $9.1B vs $9.0B | +$0.1B ✅ | FX headwind |
| Q2 2025 | $1.77 vs $1.72 | +$0.05 ✅ | $9.8B vs $9.6B | +$0.2B ✅ | IQOS share gains |
| Q3 2025 | $1.91 vs $1.84 | +$0.07 ✅ | $10.2B vs $10.0B | +$0.2B ✅ | Zyn US +40% |
| Q4 2025 | $2.01 vs $1.95 | +$0.06 ✅ | $10.5B vs $10.3B | +$0.2B ✅ | Raised FY2026 |
(e) Confidence Band Commentary
PM has beaten EPS estimates ~14 of last 16 quarters. Consistent pattern of small beats. FX impact compresses reported USD revenues.
💡 Investment Thesis
Bull: Zyn +40%/yr; IQOS market share expanding globally; 16-yr dividend streak; down 4% today on no fundamental news = buying opportunity.
Bear: Zyn FDA authorization risk. Strong USD compresses reported revenues. IQOS blocked from US (ITC ruling). Negative book equity complicates WACC.
⚖️ DDM Verdict: Accumulate — Philip Morris International Inc. (PM)
Current price: $171.55 | Analyst Avg PT: $188.22
$128
🔴 Bear
$163
📊 Base
$218
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$175 | Begin position |
| Tier 2 — Add | ≤$170 | Add on weakness |
| Tier 3 — Full | ≤$160 | Full allocation |
| Sell Alert | ≥$220 | Above fair value — consider trimming |
Accumulate at $171.55. Down 4% today — gift. Smoke-free transformation working. Add aggressively below $165. Base DDM $163, analyst consensus $188. Sell above $220.
Bore Family Office • Analysis generated by Lurch • Not investment advice.