Does the Recent Share Price Surge Signal Opportunity in Philip Morris International for 2025?

If you are wondering what to do next with Philip Morris International stock, you are definitely not alone. Judging by recent moves, PMI has been catching the eye of both longtime investors and traders looking for a strong long-term performer. Over just the past year, the share price surged by 35.3%, riding a wave of both sector optimism and broader market developments. Even the five-year gain stands at a striking 173.6%, signaling that the market’s view of risk and reward for PMI may be shifting.

There’s been a modest 1.6% climb in the last week, even as the last month saw a slight cool-off of -2.4%. Year to date, investors have enjoyed a robust 30.2% return. These moves have come as investors digest changes in global tobacco regulation and shifting sentiment toward international consumer staples. This all hints at both growth potential and evolving risk perceptions for the company.

If you are searching for signs the stock could be undervalued, PMI actually scores a 3 out of 6 using standard valuation checks. That means the company is flashing a few notable signals, but not a full green light yet. So what do those numbers actually mean for you as an investor? Next, we will dig into the specific valuation methods behind this number, then explore a more powerful way to think about value that can cut through market noise.

Why Philip Morris International is lagging behind its peers

Approach 1: Philip Morris International Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and then discounting those cash flows back to today's value. This approach helps determine what the company is worth on the basis of the money it is expected to generate in the future.

For Philip Morris International, the most recent Free Cash Flow (FCF) reported is $8.92 billion. Analysts estimate that, by 2029, annual FCF could reach $16.31 billion. Only the next five years of future cash flows are based on analyst consensus, with longer-term projections extrapolated from current trends and growth assumptions. The DCF model used is the 2 Stage Free Cash Flow to Equity approach, which takes into account changing growth rates over different periods.

Based on these cash flow projections, the estimated fair value for Philip Morris International shares is $201.97. Compared to the current share price, this suggests the stock is trading at a 21.9% discount to its intrinsic value. This may indicate the stock is undervalued by the market at present.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Philip Morris International.

Our Discounted Cash Flow (DCF) analysis suggests Philip Morris International is undervalued by 21.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Philip Morris International Price vs Earnings

The Price-to-Earnings (PE) ratio is a time-tested valuation tool, especially effective for profitable companies like Philip Morris International. Since it relates a company's share price to its per-share earnings, it quickly highlights how much investors are willing to pay for each dollar of earnings. This is particularly meaningful when those earnings are stable and predictable.

Typical "fair" PE ratios reflect more than just a company’s profit. Growth expectations and perceived risks also play big roles. Higher growth prospects or lower risk levels often drive higher multiples, while mature industries or companies with uncertain outlooks might command lower ratios. For Philip Morris International, the current PE is 29.9x. This stands well above the Tobacco industry average of 13.8x and the average among close peers of 19.1x. This suggests the market is pricing PMI for strong future growth or lower perceived risk.

To account for everything from growth rates to profit margins and risk factors, Simply Wall St constructs a “Fair Ratio,” which serves as a more holistic benchmark than plain peer or industry averages. For PMI, the Fair Ratio is 30.5x, reflecting how the company’s characteristics stack up against these broader factors. Since PMI’s current PE of 29.9x is very close to the Fair Ratio, this indicates the stock’s market price is roughly in line with what its fundamentals suggest it should be.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Philip Morris International Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story about a company; it connects your view of Philip Morris International's future (including expected revenue, margins, and risks) with a financial forecast and a calculated fair value. Unlike static ratios or models, Narratives make investing much more dynamic by letting you explain not just what numbers you expect, but why you believe they'll happen. On Simply Wall St’s Community page, millions of investors use Narratives to share and refine their perspectives, making this tool both easy to access and powerful for decision-making.

Narratives help you decide when to buy or sell by mapping your Fair Value against the current Price, so you can see instantly if the market matches your outlook. What’s more, Narratives update automatically when new information arrives, whether it’s fresh company news, earnings, or industry developments, so your analysis stays relevant. For example, some investors see robust growth in emerging markets and smoke-free products, projecting a fair value as high as $220.0, while others focus on regulatory headwinds and slowdowns, using a more cautious $153.0 estimate. No matter your view, Narratives bring your story and your numbers together, so you can always invest in line with your convictions.

For Philip Morris International, we’ll make it really easy for you with previews of two leading Philip Morris International Narratives:

• 🐂 Philip Morris International Bull Case

  Fair Value: $220.00

  Current price is 28.3% below this target

  Assumed annual revenue growth: 10.9%

  • Aggressive expansion of ZYN and smoke-free products, especially in emerging markets, is expected to drive sustained revenue and market share growth far beyond consensus expectations.
  • Diversification into wellness, healthcare, and digital platforms is set to create new high-margin revenue streams and reinforce industry leadership.
  • Strong balance sheet and industry position allow for value-accretive acquisitions and margin expansion, setting up years of profitable growth.
• 🐻 Philip Morris International Bear Case

  Fair Value: $153.00

  Current price is 3.1% above this target

  Assumed annual revenue growth: 6.4%

  • Increasing regulatory challenges and negative public health sentiment pose risks to both traditional and next-generation product growth, pressuring future revenues and operating margins.
  • ESG-driven divestment and substantial investments in new product development are expected to weigh on costs and margins, potentially limiting profitability even if demand for smoke-free products grows.
  • Persistent declines in core cigarette volumes and reliance on capital-intensive innovation create significant uncertainty over whether new segments can fully offset losses in the legacy business.

Do you think there's more to the story for Philip Morris International? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com