Head-To-Head Comparison: Philip Morris International (PM) and Altria Group (MO)

Philip Morris International (NYSE: PM) and Altria Group (NYSE:MO) are both large-cap consumer staples companies, but which is the better stock? We will compare the two businesses based on the strength of their profitabiliy, earnings, analyst recommendations, valuation, risk, dividends and institutional ownership.

Dividends

Philip Morris International pays an annual dividend of $4.16 per share and has a dividend yield of 3.4%. Altria Group pays an annual dividend of $2.44 per share and has a dividend yield of 3.2%. Philip Morris International pays out 92.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Altria Group pays out 33.0% of its earnings in the form of a dividend. Philip Morris International has raised its dividend for 9 consecutive years and Altria Group has raised its dividend for 8 consecutive years. Philip Morris International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Philip Morris International and Altria Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Philip Morris International 9.40% -65.44% 19.37%
Altria Group 55.99% 76.43% 15.22%

Volatility and Risk

Philip Morris International has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500. Comparatively, Altria Group has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Insider and Institutional Ownership

72.3% of Philip Morris International shares are owned by institutional investors. Comparatively, 62.0% of Altria Group shares are owned by institutional investors. 0.2% of Philip Morris International shares are owned by company insiders. Comparatively, 0.2% of Altria Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Philip Morris International and Altria Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Philip Morris International $26.67 billion 7.10 $11.50 billion $4.52 26.96
Altria Group $19.40 billion 7.72 $9.66 billion $7.39 10.46

Philip Morris International has higher revenue and earnings than Altria Group. Altria Group is trading at a lower price-to-earnings ratio than Philip Morris International, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Philip Morris International and Altria Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Philip Morris International 0 4 7 0 2.64
Altria Group 1 5 6 0 2.42

Philip Morris International presently has a consensus price target of $119.80, suggesting a potential downside of 1.67%. Altria Group has a consensus price target of $71.92, suggesting a potential downside of 6.94%. Given Philip Morris International’s stronger consensus rating and higher possible upside, research analysts clearly believe Philip Morris International is more favorable than Altria Group.

Summary

Philip Morris International beats Altria Group on 12 of the 17 factors compared between the two stocks.

Philip Morris International Company Profile

Philip Morris International Inc. is a holding company. The Company is engaged in the manufacture and sale of cigarettes, other tobacco products and other nicotine-containing products in markets outside of the United States. Its segments include European Union (EU); Eastern Europe, Middle East & Africa (EEMA); Asia, and Latin America & Canada. The Company’s portfolio of international and local brands is led by Marlboro. Its mid-price brands are L&M, Lark, Merit, Muratti and Philip Morris. Its other international brands include Bond Street, Chesterfield, Next and Red & White. The Company also owns various local cigarette brands, such as Dji Sam Soe, Sampoerna and U Mild in Indonesia; Champion, Fortune and Jackpot in the Philippines; Apollo-Soyuz and Optima in Russia; Morven Gold in Pakistan; Boston in Colombia; Belmont, Canadian Classics and Number 7 in Canada; f6 in Germany; Delicados in Mexico; Assos in Greece, and Petra in the Czech Republic and Slovakia.

Altria Group Company Profile

Altria Group, Inc. is a holding company. The Company’s segments include smokeable products, smokeless products and wine. The Company’s subsidiaries include Philip Morris USA Inc. (PM USA), which is engaged in the manufacture and sale of cigarettes in the United States; John Middleton Co. (Middleton), which is engaged in the manufacture and sale of machine-made cigars and pipe tobacco, and UST LLC (UST), which, through its subsidiaries, including U.S. Smokeless Tobacco Company LLC (USSTC) and Ste. Michelle Wine Estates Ltd. (Ste. Michelle), is engaged in the manufacture and sale of smokeless tobacco products and wine. Its other operating companies include Nu Mark LLC (Nu Mark), a subsidiary that is engaged in the manufacture and sale of tobacco products, and Philip Morris Capital Corporation (PMCC), a subsidiary that maintains a portfolio of finance assets. Other subsidiaries include Altria Group Distribution Company and Altria Client Services LLC.

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