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If you are wondering whether Philip Morris International is offering solid value at today’s price, it helps to step back and look at how the current share price lines up with a few different valuation checks.
The stock last closed at US$172.56, with returns of 8.7% over the past week, 9.2% over the past month, 7.6% year to date and 49.1% over the past year, while the three year and five year returns stand at 95.8% and 170.2% respectively.
Recent coverage has focused on the company as a global tobacco group with a well known international brand portfolio and a long running shift toward smoke free products. This helps frame how some investors think about its long term prospects. This kind of attention often feeds into how the market weighs the balance between regulatory risk, cash generation and the price it is willing to pay for the stock.
Our valuation model currently gives Philip Morris International a value score of 1 out of 6, meaning it screens as undervalued on one of six checks. Next we will look at what traditional approaches like P/E based peer comparisons and discounted cash flow can tell us, before finishing with a different way to think about valuation that ties everything together.
Philip Morris International scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model takes estimates of the cash a company could generate in the future and discounts those cash flows back to what they might be worth in today’s terms. It is essentially asking what you would pay now for those future dollars of free cash flow.
For Philip Morris International, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is about $10.0b. Analyst inputs and extrapolations suggest free cash flow projections stepping up over time, with a projected figure of $19.3b in 2035. Simply Wall St notes that analysts typically provide estimates only for the next few years, with later years extrapolated from those earlier assumptions.
When all those projected cash flows are discounted back, the model arrives at an estimated intrinsic value of about $207.29 per share. Compared with the recent share price of $172.56, this implies the stock screens as around 16.8% undervalued on this DCF view.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Philip Morris International is undervalued by 16.8%. Track this in your watchlist or portfolio, or discover 869 more undervalued stocks based on cash flows.
PM Discounted Cash Flow as at Jan 2026
For profitable companies, the P/E ratio is a useful yardstick because it links what you pay for each share to the earnings that business is currently generating. It gives you a quick sense of how many dollars investors are paying for each dollar of earnings.
What counts as a “fair” P/E usually reflects what the market thinks about a company’s growth prospects and risk. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher risk tends to justify a lower one.
Philip Morris International is trading on a P/E of 31.23x. That sits above the Tobacco industry average P/E of 13.20x and also above the peer group average of 25.18x. Simply Wall St’s proprietary Fair Ratio for the stock is 26.27x, which estimates the multiple you might expect given factors like earnings growth, profit margins, industry, market cap and risk profile.
The Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for those company specific features, rather than assuming all firms deserve the same multiple. Set against this 26.27x Fair Ratio, the current 31.23x P/E suggests the shares screen as overvalued on this metric.
Result: OVERVALUED
NYSE:PM P/E Ratio as at Jan 2026
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Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. Here you combine your view of Philip Morris International’s story with your own assumptions for future revenue, earnings and margins, link that forecast to a Fair Value, and then compare it with the current price, all inside the Simply Wall St Community page used by millions of investors.
Each Narrative is a short, readable story plus a set of numbers. You can easily see, for example, how one investor might focus on smoke free growth and arrive at a Fair Value near the high analyst end around US$214.07, while another is more cautious about regulation and cash flows and lands closer to the low end around US$153.00.
Because Narratives update automatically when new earnings, guidance or news are released, you can quickly check whether your Fair Value still stacks up against the latest information. This can help you decide whether the gap between your Fair Value and the current Philip Morris International share price looks attractive, stretched or somewhere in between.
For Philip Morris International, however, we will make it really easy for you with previews of two leading Philip Morris International Narratives:
These sit at opposite ends of the current analyst range and give you a clear sense of what needs to be true for either the bullish or bearish view to make sense at today’s price of US$172.56.
🐂 Philip Morris International Bull Case
Fair value in this bullish Narrative: US$214.07 per share
Implied pricing gap vs fair value: around 19.4% below this Narrative fair value at the recent price
Revenue growth assumption: 9.16% a year
Bullish analysts see faster growth in smoke free products like ZYN and IQOS, especially in emerging markets, as a key driver of higher revenue and earnings over several years.
They expect profit margins to move higher as the mix shifts toward higher margin categories and digital direct to consumer channels, while PMI leverages its global scale and balance sheet.
This view assumes the business reaches about US$53.2b of revenue and US$15.7b of earnings by 2028, with the market willing to pay a P/E of 28.1x for those earnings.
🐻 Philip Morris International Bear Case
Fair value in this bearish Narrative: US$153.00 per share
Implied pricing gap vs fair value: around 12.8% above this Narrative fair value at the recent price
Revenue growth assumption: 6.41% a year
Bearish analysts focus on tighter regulation, public health pressure and ESG driven divestment, which they see as headwinds for both traditional and next generation products.
They expect cigarette volume declines, illicit trade and heavy investment needs in smoke free categories to pressure margins and limit how much growth translates into earnings.
This view assumes the business reaches about US$47.1b of revenue and US$14.4b of earnings by 2028, with the market paying a lower P/E of 20.6x for those earnings.
The key takeaway is that the current Philip Morris International price sits between these two Fair Values. Your own stance on regulation, smoke free adoption, margins and what P/E feels reasonable will determine which Narrative feels closer to home.
If you want to stress test your view, you can start from either of these sets of numbers, adjust the growth, margins, discount rate or fair P/E to match your expectations, and see how your own Fair Value compares with where the stock is trading today.
Curious how numbers become stories that shape markets? Explore Community Narratives
Do you think there’s more to the story for Philip Morris International? Head over to our Community to see what others are saying!
NYSE:PM 1-Year Stock Price Chart
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.
Companies discussed in this article include PM.
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