The disparity between reported results at Philip Morris International and the underlying economic reality of this tobacco business is on my mind again.
Aside from the usual moral reasons, it has become unfashionable due to its slow earnings growth during the past three years that has been met with low dividend growth as well. Profits of $4.76 per share back in 2014 are actually down a bit to $4.55 right now. The quarterly dividend payout has only grown from $1 to $1.02 to $1.04 over the same time frame. On a P/E basis, it looks like Philip Morris International is trading at almost 20x earnings while profits aren’t even growing.
My personal view is that investors should be hesitant to extrapolate from that set of data points. Philip Morris is bound by the fact that it reports its earnings in U.S. dollars and is domiciled in the United States while … Read the rest of this article!