Equity valuation Philip Morris International Inc.

  • Francisco Côdea (Student)

Student thesis: Master's Thesis


The year 2022 brought unprecedented economic challenges, with inflation rates reminiscent of the 1980s and a surge in interest rates in response. This volatile landscape posed significant obstacles for companies like Philip Morris International, resulting in dwindling sales volumes and escalating production costs, ultimately reflected in a 0.6% decline in net income for the year. Amidst these dynamics, this thesis delves into the valuation of PMI, employing diverse valuation models that consider geopolitical tensions, market expansions, and evolving consumer preferences. The study utilized discounted cash flow and relative valuation models, subjecting potential scenarios to Monte Carlo and sensitivity analyses. These analyses rigorously tested the valuation's sensitivity to variations in the discount rate and growth rate (by 0.1 percentage points), examining the share price's responsiveness to changes in growth, corporate tax rate, and key macroeconomic factors, such as the risk-free rate, country risk premium, and cost of traded debt. The resulting estimated share price of $93.06 reflects a 1.35% decline from November 24, 2023, value of $94.34, supporting the thesis's recommendation to Hold PMI shares. Furthermore, a comparative assessment with Barclays' valuation reveals contrasting forecasts for PMI, highlighting the divergence of perspectives on the company's future trajectory. This comprehensive evaluation aims to provide nuanced insights into PMI's valuation landscape within a complex global economic paradigm, informing potential investment decisions.
Date of Award30 Jan 2024
Original languageEnglish
Awarding Institution
  • Universidade Católica Portuguesa
SupervisorJosé Carlos Tudela Martins (Supervisor)


  • Equity valuation
  • Philip Morris International
  • Tobacco
  • DCF valuation
  • WACC
  • Relative valuation
  • Multiples
  • Sensitivity analysis
  • Monte Carlo simulation
  • Share price
  • Investment bank


  • Mestrado em Finanças

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