Philip Morris International Outstrips Its Rivals

April 24th, 2012 00:00

The recessionary environment of the last years has been positive for tobacco industry. Smoking is a popular habit and a cigarette is a sort of an alleviant mostly in times of economic difficulties. Even if aware of the health risks, smokers do not want to quit, and namely this helped and continues to help tobacco giant’s stock profit in the last years.

The leading companies in the tobacco market are Philip Morris International, Reynolds American and Lorillard. Tacking into account the foreign potential for growth into account, Philip Morris International (PMI) seems to be in a good position in comparison to its rivals. The producer sells it tobacco products in more than 120 countries and owns about 16% share of the international cigarette market, except the United States. PMI has also raised its world market share for the fourth consecutive year in 2011.

Philip Morris’ famous Marlboro cigarette brand is appreciated all over the world and can help attract consumers overseas. Also, the tobacco giant has other best-selling cigarette brands as Chesterfield, Parliament, L&M and Virginia Slims in its range and some locally sold brands. For instance, Diana is a PMI brand only for the Italian market. The company has other brands for cigarette markets in Greece, Pakistan, Philippines and others.

Besides increasing its profits, Philip Morris is also trying to reward shareholders by raising its dividend payments. The company’s quarterly dividend for 2011 boosted by 20% from 2010 to $0.77assuring an annual dividend of $3.08 per share. At its present stock price of about $89 the company’s price to net profit margin is 18.35. Price to profits for Philip Morris rivals are in a similar range, with Lorillard at 15.88, Altria at 17.8 and Reynolds American at 16.75.

Philip Morris International

Probably one sphere in which Philip Morris stands out is its beta, a particular measure of how a stock will drop in relation to whole market. Having a beta of 0.82, the company seems to be in a better situation than its competitors at betas of less than 0.5.

These estimates mean that when a global growth finds more profitable and advantageous alternatives, bringing to a hindrance from defensive plays, Philip Morris has objective to surpass the competition. Moreover, foreign growth opportunities make a case for Philip Morris.

For all possible investors, the company’s present dividend yield of 3.3% is also appreciated in current low-yield environment. The company’s development in the tobacco industry is likely to peter off. At present Philip Morris offers great investment opportunities.

Latest News