How Does Philip Morris’s Valuation Multiple Compare with Peers?

Today, Philip Morris International (PM) was trading ~0.8% higher at 11:05 AM EST. Bank of America’s upgrade appears to have led PM’s stock price to rise. Year-to-date, Philip Morris has returned 28.1% as of May 16.

The strong performance by Philip Morris in the fourth quarter of 2018 and the first quarter of 2019 and higher expectations for the next generation of IQOS devices appear to have led to a rise in its stock price. On April 30, the U.S. Food and Drug Administration authorized the marketing of Philip Morris’s IQOS in US markets, which has also contributed to a rise in the company’s stock price.

The surge in Philip Morris’s stock price since the beginning of this year has also raised its valuation multiple. As of May 16, the company was trading at a forward PE multiple of 16.1x compared to 12.6x at the beginning of 2019. In comparison, Altria Group (MO) was trading at a forward PE multiple of 12.1x on the same day.

Also, Philip Morris was trading at 16.6 times analysts’ 2019 EPS estimate of $5.14, and 15.4 times analysts’ 2020 EPS estimate of $5.56 with its EPS expected to rise by 0.8% in 2019 and 8.2% in 2020.

In comparison, Altria was trading at 12.4 times analysts’ 2019 EPS estimate of $418, and 11.6 times analysts’ 2020 EPS estimate of $4.49 with its EPS expected to rise by 4.9% in 2019 and 7.2% in 2020.