Is There Still Value in Philip Morris After 35% Gain and ZYN’s US Growth Acceleration?

If you own Philip Morris International or have been eyeing the stock, you have probably noticed it has had a rather energetic run lately. With a 35.2% gain year-to-date and a staggering 179.5% return over five years, this is not a name investors have been ignoring. Even after a slight 4.6% dip in the last 30 days, the bigger picture points to a company with some solid long-term momentum. There is plenty of speculation about shifting regulation and changing consumer sentiment, yet Philip Morris seems to be adapting and powering ahead, unfazed by the usual sector headwinds.

So how attractive is Philip Morris at its current price of $163.77? A key question for anyone considering buying, holding, or trimming their position is whether the stock is still undervalued after this impressive run. Based on the latest round of valuation analysis, the company scores a 2 on a 6-point value scorecard, signaling it clears key hurdles for undervaluation in two out of six categories. That suggests some value advantage remains, but the picture is nuanced, especially for a stock with such a robust track record.

This is where it gets interesting. In the next section, we will break down the different valuation methods and how they shape the current investment case for Philip Morris. But stick around, because there is an even more insightful way to judge whether the stock is truly undervalued. We will reveal that perspective by the end of the article.

Philip Morris International scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

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

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to today’s dollars. This approach is widely used because it balances today’s facts with tomorrow’s expectations, ultimately giving investors a sense of what a company is really worth, beyond just its current market price.

For Philip Morris International, the latest figures show trailing twelve-month Free Cash Flow (FCF) at $8.92 billion. Analyst estimates project strong annual FCF growth over the next few years, reaching a forecasted $16.31 billion by the end of 2029. While most analyst projections only extend for five years, further FCF estimates are extrapolated by Simply Wall St to provide a ten-year view. These forward-looking numbers support a robust FCF profile for the company in the coming decade.

Combining these projections, the DCF model arrives at an intrinsic value of $201.06 per share. With the current share price at $163.77, this reflects an implied discount of roughly 18.5%, suggesting Philip Morris International may be undervalued based on future cash generation potential.

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 18.5%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Philip Morris International Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is the preferred metric for evaluating profitable companies like Philip Morris International, as it directly compares a company’s share price to its earnings. For firms with steady profits, the PE ratio provides an immediate sense of how much investors are willing to pay for each dollar of earnings, making it a practical starting point for valuation.

It is important to remember that what counts as a “normal” or “fair” PE ratio can shift depending on a company’s expected growth and risk profile. Higher growth prospects typically justify a higher PE, while greater risks can pull it down. For Philip Morris, the current PE ratio stands at 31.1x. This is well above the industry average of 14.8x and also higher than its peer average of 18.7x, suggesting that the market is pricing in superior growth or quality, and possibly a premium.

To provide a more tailored benchmark, Simply Wall St uses a proprietary Fair Ratio, in this case 32.5x, which adjusts for factors such as earnings growth, profit margins, industry dynamics, market capitalization, and company-specific risks. This approach is more meaningful than simply comparing to peers or the sector because it reflects the unique characteristics and prospects of Philip Morris International. With a current PE of 31.1x and a Fair Ratio of 32.5x, the valuation is very close to “fair value,” indicating the stock is priced about right by the market’s standards for its profile.

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 perspective on a company’s future, connecting the story you believe about the business, such as its growth drivers, risks, and market dynamics, to specific financial forecasts and an estimate of fair value.

Unlike static ratios or models, Narratives bring investing to life by letting investors see the reasons behind the numbers, whether those are assumptions on revenue, profit margins, or future multiples. Narratives are easy to use and available right on Simply Wall St’s Community page, where millions of investors already share, compare, and refine their outlooks together.

They help you decide whether to buy, hold, or sell by clearly showing if your forecasted Fair Value is above or below the current price, so you can confidently act when opportunity arises. As new information or earnings updates come in, Narratives are dynamically refreshed, helping you stay up to date and ready to pivot your thesis when needed.

For example, the most optimistic Narrative for Philip Morris International sets a Fair Value as high as $220, while the most pessimistic drops as low as $153. Your decision can reflect your own story and assumptions, not just the consensus.

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

Undervalued by approximately 25.6%

Assumed Revenue Growth: 10.9%

• Anticipates aggressive smoke-free and emerging market growth, with ZYN and IQOS products driving sustained revenue and market share gains beyond consensus expectations.
• Expansion into wellness, healthcare, and digital platforms creates new high-margin revenue streams and strengthens long-term profitability.
• Risks include tighter regulation, ongoing declines in cigarette volumes, and ESG pressures. However, the narrative expects these to be outweighed by innovative growth strategies and global expansion.

🐻 Philip Morris International Bear Case

Fair Value: $153.00

Overvalued by approximately 7.1%

Assumed Revenue Growth: 6.4%

• Predicts intensifying public health sentiment, regulatory headwinds, and ESG-driven divestment will challenge both traditional and next-generation product growth.
• Expects ongoing declines in cigarette volumes and high capital requirements for smoke-free technologies to pressure margins and profitability.
• Despite some diversification and innovation, the narrative sees risks outweighing upside. This makes the current price look too high relative to likely growth and earnings outcomes.

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