The terms of Philip Morris International’s spinoff from Altria in 2008 made it a company with characteristics that are, to my knowledge, unmatched by any other large-cap stock. And it is that Philip Morris International is a company that sells essentially the same cigarette brands that Altria sells to investors in the United States, except 0% of Philip Morris International’s revenues are generated by selling cigarettes to American investors. It’s all overseas money, except Philip Morris International keeps its headquarters on Park Avenue in New York and reports all of its profits, volumes, and balance sheet considerations in numbers that are converted to U.S. dollars.
This has two implications for those who study the stock:
First, I’ll state the conclusion. Philip Morris International benefits when the dollar declines against the rest of the world’s currencies, as earnings become stronger than actual performance during that point in the currency cycle. The … Read the rest of this article!