Philip Morris International

Methodology

Philip Morris' international cigarette volumes face secular decline offset by pricing power and heated tobacco growth through IQOS. The transition to reduced-risk products creates uncertainty about sustainable earnings power. Focus on free cash flow sustainability and pricing ability rather than EPS growth for this mature tobacco company managing portfolio transformation.

Methodology

PEG analysis is complicated for Philip Morris given declining cigarette volumes partially offset by IQOS adoption and pricing. Growth rates can be minimal or negative in traditional products while smoke-free category shows promise. Evaluate using dividend yield and free cash flow metrics rather than traditional growth-based valuation for this transitioning tobacco company.

Methodology

Philip Morris offers a substantial dividend yield that dominates total return expectations, making PEGY more relevant than standalone PEG despite volume challenges. The high yield compensates for cigarette declines as management transitions to smoke-free products. For international tobacco investors, dividend sustainability and IQOS conversion rates matter more than traditional earnings growth.