Valuation of Philip Morris International Inc.

Ella Horvath & Karolina Hammarskiöld

Student thesis: Master thesis


The overall aim of this thesis is to determine the intrinsic value of Philip Morris International Inc. as of 13 May 2019. PMI is a leading international tobacco company engaged in the manufacture and sale of cigarettes and other nicotine-containing products in markets outside of the United States. The company is a United States based entity incorporated in Virginia with headquarters in New York City, USA, and an operations center in Lausanne, Switzerland. PMI is the world’s largest transnational tobacco company with net revenues of $29.6 billion, holding the world’s second largest market share after China National Tobacco Corporation. Philip Morris International Inc. has committed to changing the tobacco industry for good, the company is now building its future on reduced-risk products, shifting from its core business characterized by steady cash flow generation to one defined by growing investments into research and development. The changing industry environment in combination with the typical characteristics of a tobacco company suggests Philip Morris International Inc. as a compelling valuation case. The intrinsic valuation approaches suggest a share price of $89.04 as of December 31, 2018. If this value is discounted forward to 13 May 2019 the share price equals $89.89. When compared to the traded share price of $83.25, retrieved at the same date, it suggests an upside of 7.98%. Consequently, this thesis concludes a BUY investment recommendation for PMI shares.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2019
Number of pages159