Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



A Great Company at a Fair Price: Philip Morris retail editor/analyst Austin Smith makes a strong case for why Philip Morris International (NYSE: PM  ) is a great company at a fair price. With shares trading at 18 times earnings and an estimated growth rate of 9% to 10% this year, potential investors might question the logic in paying a premium for a company with earnings right in line with the Dow Jones Industrial Average and the S&P 500, especially considering its reported 1.2% volume decline over the past year, and the continued softness of the European market.

At a glance, certainly there's plenty of reason for doubt, but there's more going on here than meets the eye. First of all, that 1.2% decline is not a genuine representation of volume. Last year, PM volume skyrocketed post-tsunami, with Japan Tobacco temporarily out of the picture as a competitor. Volume was therefore disproportionate to norms, and adjusted for that influence it actually grew 1.4% this year.

The situation in Europe is more difficult to explain away, and may very well continue down the same path with little that Philip Morris can do to reverse trends. However, to dwell on Europe is to ignore the Asia division, where volume grew a staggering 7.4%, and that would be a mistake. The swelling Asian market will more than make up for losses in Europe in the future, and this is growth that's sustainable, without the usual cause for concern about saturating markets. Why? Because in Asia, the middle class is rising, creating a brand-new (and rapidly growing) addressable market. For Philip Morris, the expanding global middle class means plenty of customers and plenty of room for expansion, and it's only just begun. 

PM shares may seem a bit expensive, but savvy investors recognize the solid strategy in buying now and holding long -term -- all due to ramifications of the evolving world market. Profiting from our increasingly global economy can be as easy as investing in your own backyard, and our free report 3 American Companies Set to Dominate the World shows you how. Click here to get your free copy before it’s gone.

Austin Smith owns shares of Philip Morris International. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2002237, ~/Articles/ArticleHandler.aspx, 10/25/2016 5:06:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,169.27 -53.76 -0.30%
S&P 500 2,143.16 -8.17 -0.38%
NASD 5,283.40 -26.43 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 4:00 PM
MO $64.71 Down -0.24 -0.37%
Altria Group CAPS Rating: ****
PM $96.58 Down -0.33 -0.34%
Philip Morris Inte… CAPS Rating: ****
VGR $20.67 Down -0.26 -1.24%
Vector Group CAPS Rating: ***