Philip Morris International Inc (NYSE: PM ). is transitioning towards a smoke-free business model, with smoke-free products contributing to 35.4% of net revenues in Q2 2023. The tobacco giant has outlined its growth targets for the period between 2024 and 2026, which include organic net revenue growth of 6-8%, adjusted operating income growth of 8-10% CAGR, and adjusted EPS growth of 9-11% CAGR.
The company's leading product in the smoke-free category is IQOS, and by 2026, Philip Morris expects heated tobacco unit shipment volumes to reach 180-200 billion units. Additionally, the firm anticipates nicotine pouch shipments to range from 800 million to 1 billion cans within the same timeframe.
This strategic shift towards smoke-free products aligns with global trends and changing consumer preferences. As Philip Morris continues this transition, it remains to be seen how these projections will impact the company's overall market performance in the coming years.
The company's recent performance, as provided by InvestingPro, indicates a solid financial standing. Philip Morris operates with a high return on assets of 16.53%, and its revenue growth has been accelerating, with a 14.49% increase in the second quarter of 2023. This is in line with one of the InvestingPro Tips, which highlights the company's impressive gross profit margins of 63.02%.
Moreover, the company's commitment to its shareholders is evident with a significant dividend yield of 5.59%. Philip Morris has not only maintained but also raised its dividend for 15 consecutive years, a fact that aligns with another InvestingPro Tip.
The market cap of Philip Morris stands at 143.27B USD, and the stock trades at a P/E ratio of 17.86, suggesting a fairly valued company given its earnings.
In the face of changing consumer behavior and market dynamics, Philip Morris is showing resilience and strategic adaptability. For more insights and tips, you can check out InvestingPro that offers a wealth of knowledge, including numerous additional tips and real-time metrics.
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