Philip Morris: Too Expensive For Tobacco

Jakob Mayer profile picture
Jakob Mayer


  • Philip Morris' powerful position in the growing reduced-risk products market caught my eye while looking for a tobacco dividend stock.
  • Acquisitions like the recent Swedish Match deal support Philip Morris’ growth story but high debt at an increasing cost of capital will make it nearly impossible to keep it.
  • Upon closer examination, I lost interest because of its high valuation and better alternative investments available.

Mann füllt Gadget mit einer Zigarette. neue Rauchertechnologie. Raucher rauchen Hybrid rauchlose Zigarette Gerät, das echte Tabaknachfüllungen verwendet, Hybrid-Technologie zwischen analogen und elektronischen Zigaretten.

Diy13/iStock via Getty Images

Investment thesis

Philip Morris International (NYSE:PM) is a highly profitable tobacco stock, which is the pioneer of the reduced-risk products market. Supposedly, the killer of traditional cigarettes. During the first nine months in 2022 RRPs (reduced-risk products) already contributed over 29.8% of

table of ROCE

Table made by author using data from Philip Morris International IR

table of cigarette volume

Table made by author using data from Philip Morris International IR

column diagram of cigarette volume

Diagram made by author using data from Philip Morris International IR

Data by YCharts

table from DCF

Table made by author using data from SA and Philip Morris IR

table of dividend history

Table made by author using data from SA

This article was written by

Jakob Mayer profile picture
Investor and contributor for Seeking Alpha. I follow Warren Buffetts' advice: “Never invest in a business you cannot understand.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Although I thoroughly analyzed this stock and checked every metric, I cannot guarantee that all the information provided in this article is correct. Do your own research before investing in a company.

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