Philip Morris International Shares Surge as Transformation Continues. Is It Too Late to Buy the Stock?

Core Viewpoint - Philip Morris International has transformed into a strong growth company driven by its smoke-free business, with significant stock performance improvements over the past year [1][10]. Financial Performance - The company's organic revenue rose 7.2% year over year to $9.7 billion, with adjusted earnings per share (EPS) climbing 14% to $1.55 [5][6]. - Gross profits increased 12.6% organically, with Zyn and IQOS having higher gross margins than traditional cigarettes [7]. Growth Drivers - Zyn, a nicotine pouch brand, saw volumes surge 46.2% in Q4 to 183.8 million cans, and is expected to grow between 34% to 41% in 2025 [3][11]. - Heated tobacco units (HTUs) volumes rose 5.1% to 35.7 billion units, with a 13% increase when excluding inventory effects, driven by markets in Japan and Europe [4][11]. - Traditional cigarette volumes increased by 1.1% to 152.8 billion units, with a slight market share decline outside the U.S. and China [5]. Future Guidance - The company anticipates organic revenue growth of 6% to 8% and adjusted EPS between $7.04 to $7.17, indicating growth of 10.5% to 12.5% in constant currency [8][9]. - Expected operating cash flow is about $11 billion, with $1.5 billion allocated for capital expenditures to expand Zyn capacity in the U.S. [9]. Valuation - The stock trades at a forward price-to-earnings (P/E) ratio of just over 20 times for 2025, with a PEG ratio under 0.4, indicating it is undervalued [13]. - The company offers a robust quarterly dividend of $1.35, translating to a forward dividend yield of 3.7% [10][14].