Philip Morris (PM) is a tobacco company with an ambitious plan to build a global smoke-less tobacco franchise. Long-term investors will greatly benefit from the company’s execution of this growth plan. Investors also benefit from a 5.7% dividend yield. Furthermore, Philip Morris represents an attractive relative value and trades for a cheaper multiple of its earnings than the stock market average despite an above average earnings growth rate and an extremely stable underlying business. Long-term investors should use the recent pullback in the stock price to establish a new position or add to their existing position.
Philip Morris’ stock is down over 25% in the past 3 months. The stock dived after the company reported its Q1 2018 earnings on April 19th. Although the company beat EPS estimates, investors were disappointed by the company’s revenue growth guidance. Specifically, the company has set high expectations regarding its initiatives to sell smoke-free cigarettes and lowered expectations during the quarterly earnings call.
