Another Strong Quarter for PMI in Q4 Fiscal 2022, but Performance Now Reflected in Stock Valuation

Philip Morris International, or PMI, reported another decent performance in the fourth quarter, with volume and revenue slightly above our forecasts on an organic basis in some of the smaller regions and the decline in operating income slightly less steep than we had expected. There was also a modest revenue contribution from the Swedish Match acquisition, which closed during the quarter, a few days earlier than our assumption. The underlying business appears to be robust, despite the premium positioning of the portfolio and the prevailing risks to consumer spending. It was also a good fourth quarter for the stock, which reversed its underperformance relative to broader indexes, and at the close of business on Feb. 9 was trading a whisker short of our $103 fair value estimate. We retain our valuation and wide moat rating.