Philip Morris International scores 74 for management and 47 for moat. The management score rests on a return on invested capital of 25.6% and a gross margin of 67.1% — figures that describe a business earning a respectable return on what it employs. Shareholder equity is negative, so the debt-to-equity figure is not meaningful here — usually the mark of heavy buybacks rather than distress, but worth checking. A moderate moat alongside strong management is a combination worth understanding before the price matters at all.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 7.2% a year, the rate measured from the filings. The exit multiple assumed is 14.4x. That produces an intrinsic value of $49.81, a 10-CAP price of $84.36 and a payback time price of $93.52, with the value zone set at the highest of the three, $93.52. Today's price of $188.18 is 101% above it.
The price is above the value zone and the business scores 47 for moat and 74 for management. Neither test argues for paying up here.
| Price | $188.18 |
| Market cap | $293.3B |
| P/E ratio | 27.0x |
| Return on invested capital | 25.6% |
| Gross margin | 67.1% |
| Debt to equity | -4.89x |
| Free cash flow yield | 4.3% |
| Growth rate used | 7.2% |
| Growth rate measured | 7.0% |
| Exit multiple assumed | 14.4x |
| Company | Moat | Buy price |
| Procter & Gamble (PG) | 42 | $71.15 |
| The Coca-Cola Company (KO) | 53 | $39.26 |
| Costco Wholesale (COST) | 98 | $307.95 |
| PepsiCo Inc. (PEP) | 42 | $80.52 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Philip Morris International rather than accepting ours.