Intrinsic value of Philip Morris International - PM

Previous Close

$81.40

  Intrinsic Value

$29.72

stock screener

  Rating & Target

str. sell

-63%

Previous close

$81.40

 
Intrinsic value

$29.72

 
Up/down potential

-63%

 
Rating

str. sell

We calculate the intrinsic value of PM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 126.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.70
  11.03
  10.43
  9.88
  9.40
  8.96
  8.56
  8.20
  7.88
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
Revenue, $m
  87,235
  96,858
  106,957
  117,529
  128,572
  140,087
  152,079
  164,557
  177,531
  191,015
  205,028
  219,591
  234,726
  250,459
  266,821
  283,843
  301,559
  320,007
  339,225
  359,256
  380,146
  401,940
  424,689
  448,445
  473,264
  499,204
  526,325
  554,692
  584,371
  615,434
Variable operating expenses, $m
  68,013
  75,403
  83,160
  91,280
  99,762
  108,606
  117,817
  127,401
  137,366
  147,723
  157,476
  168,661
  180,286
  192,370
  204,937
  218,011
  231,618
  245,787
  260,549
  275,934
  291,978
  308,718
  326,191
  344,437
  363,500
  383,423
  404,254
  426,042
  448,838
  472,696
Fixed operating expenses, $m
  5,831
  5,959
  6,090
  6,224
  6,361
  6,501
  6,644
  6,790
  6,939
  7,092
  7,248
  7,407
  7,570
  7,737
  7,907
  8,081
  8,259
  8,441
  8,626
  8,816
  9,010
  9,208
  9,411
  9,618
  9,829
  10,046
  10,267
  10,493
  10,723
  10,959
Total operating expenses, $m
  73,844
  81,362
  89,250
  97,504
  106,123
  115,107
  124,461
  134,191
  144,305
  154,815
  164,724
  176,068
  187,856
  200,107
  212,844
  226,092
  239,877
  254,228
  269,175
  284,750
  300,988
  317,926
  335,602
  354,055
  373,329
  393,469
  414,521
  436,535
  459,561
  483,655
Operating income, $m
  13,392
  15,496
  17,707
  20,025
  22,449
  24,980
  27,618
  30,366
  33,226
  36,200
  40,304
  43,522
  46,869
  50,352
  53,977
  57,751
  61,682
  65,779
  70,050
  74,506
  79,157
  84,014
  89,087
  94,390
  99,935
  105,735
  111,804
  118,157
  124,810
  131,778
EBITDA, $m
  15,086
  17,265
  19,555
  21,956
  24,467
  27,088
  29,821
  32,666
  35,628
  38,708
  41,912
  45,244
  48,710
  52,316
  56,069
  59,976
  64,047
  68,288
  72,710
  77,324
  82,138
  87,166
  92,418
  97,907
  103,646
  109,649
  115,931
  122,507
  129,392
  136,605
Interest expense (income), $m
  1,052
  1,854
  1,213
  1,471
  1,741
  2,023
  2,318
  2,626
  2,947
  3,280
  3,627
  3,988
  4,362
  4,752
  5,156
  5,577
  6,014
  6,469
  6,943
  7,436
  7,950
  8,485
  9,044
  9,626
  10,234
  10,870
  11,533
  12,226
  12,951
  13,710
  14,503
Earnings before tax, $m
  11,538
  14,282
  16,236
  18,284
  20,426
  22,661
  24,992
  27,419
  29,945
  32,573
  36,317
  39,160
  42,118
  45,196
  48,400
  51,736
  55,212
  58,836
  62,614
  66,556
  70,672
  74,970
  79,461
  84,156
  89,065
  94,202
  99,577
  105,206
  111,100
  117,275
Tax expense, $m
  3,115
  3,856
  4,384
  4,937
  5,515
  6,119
  6,748
  7,403
  8,085
  8,795
  9,805
  10,573
  11,372
  12,203
  13,068
  13,969
  14,907
  15,886
  16,906
  17,970
  19,081
  20,242
  21,454
  22,722
  24,048
  25,434
  26,886
  28,406
  29,997
  31,664
Net income, $m
  8,423
  10,426
  11,852
  13,347
  14,911
  16,543
  18,244
  20,016
  21,860
  23,778
  26,511
  28,587
  30,746
  32,993
  35,332
  37,768
  40,305
  42,950
  45,708
  48,586
  51,590
  54,728
  58,006
  61,434
  65,018
  68,767
  72,691
  76,800
  81,103
  85,611

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  47,984
  53,277
  58,832
  64,647
  70,721
  77,056
  83,652
  90,515
  97,652
  105,069
  112,777
  120,787
  129,112
  137,766
  146,766
  156,129
  165,874
  176,021
  186,592
  197,611
  209,101
  221,089
  233,602
  246,669
  260,321
  274,589
  289,508
  305,111
  321,436
  338,522
Adjusted assets (=assets-cash), $m
  47,984
  53,277
  58,832
  64,647
  70,721
  77,056
  83,652
  90,515
  97,652
  105,069
  112,777
  120,787
  129,112
  137,766
  146,766
  156,129
  165,874
  176,021
  186,592
  197,611
  209,101
  221,089
  233,602
  246,669
  260,321
  274,589
  289,508
  305,111
  321,436
  338,522
Revenue / Adjusted assets
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
  1.818
Average production assets, $m
  12,998
  14,432
  15,937
  17,512
  19,157
  20,873
  22,660
  24,519
  26,452
  28,461
  30,549
  32,719
  34,974
  37,318
  39,756
  42,293
  44,932
  47,681
  50,545
  53,529
  56,642
  59,889
  63,279
  66,818
  70,516
  74,381
  78,422
  82,649
  87,071
  91,700
Working capital, $m
  174
  194
  214
  235
  257
  280
  304
  329
  355
  382
  410
  439
  469
  501
  534
  568
  603
  640
  678
  719
  760
  804
  849
  897
  947
  998
  1,053
  1,109
  1,169
  1,231
Total debt, $m
  22,471
  27,234
  32,234
  37,468
  42,934
  48,635
  54,572
  60,749
  67,171
  73,847
  80,784
  87,993
  95,486
  103,275
  111,375
  119,801
  128,572
  137,704
  147,218
  157,135
  167,476
  178,265
  189,527
  201,288
  213,574
  226,415
  239,842
  253,885
  268,578
  283,955
Total liabilities, $m
  43,186
  47,949
  52,949
  58,183
  63,649
  69,350
  75,287
  81,464
  87,886
  94,562
  101,499
  108,708
  116,201
  123,990
  132,090
  140,516
  149,287
  158,419
  167,933
  177,850
  188,191
  198,980
  210,242
  222,003
  234,289
  247,130
  260,557
  274,600
  289,293
  304,670
Total equity, $m
  4,798
  5,328
  5,883
  6,465
  7,072
  7,706
  8,365
  9,052
  9,765
  10,507
  11,278
  12,079
  12,911
  13,777
  14,677
  15,613
  16,587
  17,602
  18,659
  19,761
  20,910
  22,109
  23,360
  24,667
  26,032
  27,459
  28,951
  30,511
  32,144
  33,852
Total liabilities and equity, $m
  47,984
  53,277
  58,832
  64,648
  70,721
  77,056
  83,652
  90,516
  97,651
  105,069
  112,777
  120,787
  129,112
  137,767
  146,767
  156,129
  165,874
  176,021
  186,592
  197,611
  209,101
  221,089
  233,602
  246,670
  260,321
  274,589
  289,508
  305,111
  321,437
  338,522
Debt-to-equity ratio
  4.680
  5.110
  5.480
  5.800
  6.070
  6.310
  6.520
  6.710
  6.880
  7.030
  7.160
  7.280
  7.400
  7.500
  7.590
  7.670
  7.750
  7.820
  7.890
  7.950
  8.010
  8.060
  8.110
  8.160
  8.200
  8.250
  8.280
  8.320
  8.360
  8.390
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8,423
  10,426
  11,852
  13,347
  14,911
  16,543
  18,244
  20,016
  21,860
  23,778
  26,511
  28,587
  30,746
  32,993
  35,332
  37,768
  40,305
  42,950
  45,708
  48,586
  51,590
  54,728
  58,006
  61,434
  65,018
  68,767
  72,691
  76,800
  81,103
  85,611
Depreciation, amort., depletion, $m
  1,694
  1,769
  1,849
  1,931
  2,018
  2,108
  2,202
  2,300
  2,402
  2,508
  1,608
  1,722
  1,841
  1,964
  2,092
  2,226
  2,365
  2,510
  2,660
  2,817
  2,981
  3,152
  3,330
  3,517
  3,711
  3,915
  4,127
  4,350
  4,583
  4,826
Funds from operations, $m
  10,117
  12,195
  13,701
  15,279
  16,929
  18,651
  20,447
  22,316
  24,262
  26,286
  28,119
  30,309
  32,587
  34,957
  37,424
  39,993
  42,670
  45,460
  48,369
  51,404
  54,572
  57,880
  61,337
  64,950
  68,729
  72,682
  76,819
  81,150
  85,686
  90,437
Change in working capital, $m
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  42
  44
  45
  48
  50
  52
  54
  57
  59
  62
Cash from operations, $m
  10,098
  12,176
  13,681
  15,258
  16,907
  18,628
  20,423
  22,291
  24,236
  26,259
  28,091
  30,280
  32,557
  34,926
  37,392
  39,959
  42,634
  45,423
  48,330
  51,364
  54,530
  57,837
  61,291
  64,903
  68,679
  72,630
  76,765
  81,093
  85,626
  90,375
Maintenance CAPEX, $m
  -613
  -684
  -760
  -839
  -922
  -1,008
  -1,099
  -1,193
  -1,290
  -1,392
  -1,498
  -1,608
  -1,722
  -1,841
  -1,964
  -2,092
  -2,226
  -2,365
  -2,510
  -2,660
  -2,817
  -2,981
  -3,152
  -3,330
  -3,517
  -3,711
  -3,915
  -4,127
  -4,350
  -4,583
New CAPEX, $m
  -1,358
  -1,434
  -1,505
  -1,575
  -1,645
  -1,716
  -1,787
  -1,859
  -1,933
  -2,009
  -2,088
  -2,170
  -2,255
  -2,344
  -2,438
  -2,536
  -2,640
  -2,749
  -2,864
  -2,985
  -3,112
  -3,247
  -3,390
  -3,540
  -3,698
  -3,865
  -4,041
  -4,227
  -4,422
  -4,628
Cash from investing activities, $m
  -1,971
  -2,118
  -2,265
  -2,414
  -2,567
  -2,724
  -2,886
  -3,052
  -3,223
  -3,401
  -3,586
  -3,778
  -3,977
  -4,185
  -4,402
  -4,628
  -4,866
  -5,114
  -5,374
  -5,645
  -5,929
  -6,228
  -6,542
  -6,870
  -7,215
  -7,576
  -7,956
  -8,354
  -8,772
  -9,211
Free cash flow, $m
  8,128
  10,058
  11,416
  12,844
  14,340
  15,904
  17,537
  19,239
  21,012
  22,858
  24,505
  26,502
  28,579
  30,741
  32,990
  35,331
  37,769
  40,309
  42,957
  45,719
  48,600
  51,608
  54,750
  58,033
  61,465
  65,054
  68,809
  72,739
  76,854
  81,164
Issuance/(repayment) of debt, $m
  -11,868
  4,763
  5,000
  5,234
  5,467
  5,701
  5,937
  6,177
  6,423
  6,676
  6,937
  7,209
  7,492
  7,789
  8,100
  8,427
  8,770
  9,132
  9,514
  9,917
  10,341
  10,789
  11,262
  11,761
  12,287
  12,841
  13,426
  14,043
  14,693
  15,378
Issuance/(repurchase) of shares, $m
  8,462
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -3,406
  4,763
  5,000
  5,234
  5,467
  5,701
  5,937
  6,177
  6,423
  6,676
  6,937
  7,209
  7,492
  7,789
  8,100
  8,427
  8,770
  9,132
  9,514
  9,917
  10,341
  10,789
  11,262
  11,761
  12,287
  12,841
  13,426
  14,043
  14,693
  15,378
Total cash flow (excl. dividends), $m
  4,722
  14,822
  16,416
  18,077
  19,807
  21,605
  23,474
  25,416
  27,435
  29,533
  31,442
  33,711
  36,072
  38,530
  41,089
  43,757
  46,539
  49,442
  52,471
  55,635
  58,941
  62,397
  66,012
  69,793
  73,751
  77,895
  82,235
  86,782
  91,547
  96,541
Retained Cash Flow (-), $m
  -16,884
  -529
  -556
  -582
  -607
  -633
  -660
  -686
  -714
  -742
  -771
  -801
  -832
  -865
  -900
  -936
  -974
  -1,015
  -1,057
  -1,102
  -1,149
  -1,199
  -1,251
  -1,307
  -1,365
  -1,427
  -1,492
  -1,560
  -1,633
  -1,709
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -12,163
  14,292
  15,861
  17,496
  19,199
  20,971
  22,814
  24,730
  26,722
  28,792
  30,671
  32,910
  35,239
  37,664
  40,189
  42,821
  45,565
  48,427
  51,414
  54,533
  57,792
  61,198
  64,760
  68,486
  72,386
  76,468
  80,743
  85,222
  89,914
  94,833
Discount rate, %
  11.20
  11.76
  12.35
  12.97
  13.61
  14.29
  15.01
  15.76
  16.55
  17.37
  18.24
  19.16
  20.11
  21.12
  22.18
  23.28
  24.45
  25.67
  26.95
  28.30
  29.72
  31.20
  32.76
  34.40
  36.12
  37.93
  39.82
  41.81
  43.91
  46.10
PV of cash for distribution, $m
  -10,938
  11,443
  11,185
  10,744
  10,142
  9,408
  8,572
  7,670
  6,735
  5,801
  4,855
  4,017
  3,253
  2,576
  1,992
  1,504
  1,106
  792
  552
  373
  245
  156
  96
  57
  32
  18
  9
  5
  2
  1
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Philip Morris International Inc. is a holding company. The Company is engaged in the manufacture and sale of cigarettes, other tobacco products and other nicotine-containing products in markets outside of the United States. Its segments include European Union (EU); Eastern Europe, Middle East & Africa (EEMA); Asia, and Latin America & Canada. The Company's portfolio of international and local brands is led by Marlboro. Its mid-price brands are L&M, Lark, Merit, Muratti and Philip Morris. Its other international brands include Bond Street, Chesterfield, Next and Red & White. The Company also owns various local cigarette brands, such as Dji Sam Soe, Sampoerna and U Mild in Indonesia; Champion, Fortune and Jackpot in the Philippines; Apollo-Soyuz and Optima in Russia; Morven Gold in Pakistan; Boston in Colombia; Belmont, Canadian Classics and Number 7 in Canada; f6 in Germany; Delicados in Mexico; Assos in Greece, and Petra in the Czech Republic and Slovakia.

FINANCIAL RATIOS  of  Philip Morris International (PM)

Valuation Ratios
P/E Ratio 18.1
Price to Sales 4.7
Price to Book -10
Price to Tangible Book
Price to Cash Flow 15.6
Price to Free Cash Flow 18.3
Growth Rates
Sales Growth Rate -0.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 22.1%
Cap. Spend. - 3 Yr. Gr. Rate -0.5%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity -203.7%
Total Debt to Equity -229.1%
Interest Coverage 10
Management Effectiveness
Return On Assets 21.8%
Ret/ On Assets - 3 Yr. Avg. 22.1%
Return On Total Capital 44.1%
Ret/ On T. Cap. - 3 Yr. Avg. 42.6%
Return On Equity -53.7%
Return On Equity - 3 Yr. Avg. -60.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 64.8%
Gross Margin - 3 Yr. Avg. 64.9%
EBITDA Margin 43.9%
EBITDA Margin - 3 Yr. Avg. 43%
Operating Margin 40.5%
Oper. Margin - 3 Yr. Avg. 39.8%
Pre-Tax Margin 37.2%
Pre-Tax Margin - 3 Yr. Avg. 36.3%
Net Profit Margin 26.1%
Net Profit Margin - 3 Yr. Avg. 25.6%
Effective Tax Rate 27.9%
Eff/ Tax Rate - 3 Yr. Avg. 28.3%
Payout Ratio 91.5%

PM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PM stock intrinsic value calculation we used $78098 million for the last fiscal year's total revenue generated by Philip Morris International. The default revenue input number comes from 0001 income statement of Philip Morris International. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PM stock valuation model: a) initial revenue growth rate of 11.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11.2%, whose default value for PM is calculated based on our internal credit rating of Philip Morris International, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Philip Morris International.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PM stock the variable cost ratio is equal to 78.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5705 million in the base year in the intrinsic value calculation for PM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Philip Morris International.

Corporate tax rate of 27% is the nominal tax rate for Philip Morris International. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PM are equal to 14.9%.

Life of production assets of 19 years is the average useful life of capital assets used in Philip Morris International operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PM is equal to 0.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-12086 million for Philip Morris International - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1554.51 million for Philip Morris International is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Philip Morris International at the current share price and the inputted number of shares is $126.5 billion.

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COMPANY NEWS

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