Stock Analysis on Net

Philip Morris International Inc. (NYSE:PM)

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Philip Morris International Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1 8,281 8,804 9,635 10,188 8,950
Cost of capital2 8.96% 8.33% 8.56% 8.89% 8.41%
Invested capital3 48,390 51,440 47,466 29,268 31,958
 
Economic profit4 3,947 4,521 5,572 7,585 6,262

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 8,2818.96% × 48,390 = 3,947

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Philip Morris International Inc. economic profit decreased from 2022 to 2023 and from 2023 to 2024.

Net Operating Profit after Taxes (NOPAT)

Philip Morris International Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net earnings attributable to PMI 7,057 7,813 9,048 9,109 8,056
Deferred income tax expense (benefit)1 (116) (330) (234) (18) (143)
Increase (decrease) in allowances2 (32) 37 (28) 47 3
Increase (decrease) in accrued product warranty3 (4) (24) (9) (24) (3)
Increase (decrease) in restructuring related liabilities4 (1) (11) (102) (38) (11)
Increase (decrease) in equity equivalents5 (153) (328) (373) (33) (154)
Interest expense 1,763 1,526 768 737 728
Interest expense, operating lease liability6 36 33 21 19 30
Adjusted interest expense 1,799 1,559 789 756 758
Tax benefit of interest expense7 (378) (327) (166) (159) (159)
Adjusted interest expense, after taxes8 1,421 1,232 623 597 599
Interest income (620) (465) (180) (109) (110)
Investment income, before taxes (620) (465) (180) (109) (110)
Tax expense (benefit) of investment income9 130 98 38 23 23
Investment income, after taxes10 (490) (367) (142) (86) (87)
Net income (loss) attributable to noncontrolling interest 446 455 479 601 536
Net operating profit after taxes (NOPAT) 8,281 8,804 9,635 10,188 8,950

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowances.

3 Addition of increase (decrease) in accrued product warranty.

4 Addition of increase (decrease) in restructuring related liabilities.

5 Addition of increase (decrease) in equity equivalents to net earnings attributable to PMI.

6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 604 × 5.90% = 36

7 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,799 × 21.00% = 378

8 Addition of after taxes interest expense to net earnings attributable to PMI.

9 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 620 × 21.00% = 130

10 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Philip Morris International Inc. NOPAT decreased from 2022 to 2023 and from 2023 to 2024.

Cash Operating Taxes

Philip Morris International Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Provision for income taxes 3,017 2,339 2,244 2,671 2,377
Less: Deferred income tax expense (benefit) (116) (330) (234) (18) (143)
Add: Tax savings from interest expense 378 327 166 159 159
Less: Tax imposed on investment income 130 98 38 23 23
Cash operating taxes 3,381 2,899 2,606 2,825 2,656

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Philip Morris International Inc. cash operating taxes increased from 2022 to 2023 and from 2023 to 2024.

Invested Capital

Philip Morris International Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Short-term borrowings 137 1,968 5,637 225 244
Current portion of long-term debt 3,392 4,698 2,611 2,798 3,124
Long-term debt, excluding current portion 42,166 41,243 34,875 24,783 28,168
Operating lease liability1 604 653 614 536 707
Total reported debt & leases 46,299 48,562 43,737 28,342 32,243
Total PMI stockholders’ deficit (11,750) (11,225) (8,957) (10,106) (12,567)
Net deferred tax (assets) liabilities2 1,577 1,521 1,353 (169) (726)
Allowances3 47 79 42 70 23
Accrued product warranty4 76 80 104 113 137
Restructuring related liabilities5 28 29 40 142 180
Equity equivalents6 1,728 1,709 1,539 156 (386)
Accumulated other comprehensive (income) loss, net of tax7 11,314 11,815 9,559 9,577 11,181
Noncontrolling interests 1,880 1,779 2,646 1,898 1,936
Adjusted total PMI stockholders’ deficit 3,172 4,078 4,787 1,525 164
Construction in progress8 (1,081) (1,200) (1,058) (599) (449)
Invested capital 48,390 51,440 47,466 29,268 31,958

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of accrued product warranty.

5 Addition of restructuring related liabilities.

6 Addition of equity equivalents to total PMI stockholders’ deficit.

7 Removal of accumulated other comprehensive income.

8 Subtraction of construction in progress.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Philip Morris International Inc. invested capital increased from 2022 to 2023 but then slightly decreased from 2023 to 2024 not reaching 2022 level.

Cost of Capital

Philip Morris International Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 225,952 225,952 ÷ 271,202 = 0.83 0.83 × 10.09% = 8.41%
Debt, including finance lease obligations3 44,646 44,646 ÷ 271,202 = 0.16 0.16 × 4.14% × (1 – 21.00%) = 0.54%
Operating lease liability4 604 604 ÷ 271,202 = 0.00 0.00 × 5.90% × (1 – 21.00%) = 0.01%
Total: 271,202 1.00 8.96%

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 138,184 138,184 ÷ 185,804 = 0.74 0.74 × 10.09% = 7.51%
Debt, including finance lease obligations3 46,967 46,967 ÷ 185,804 = 0.25 0.25 × 4.04% × (1 – 21.00%) = 0.81%
Operating lease liability4 653 653 ÷ 185,804 = 0.00 0.00 × 5.10% × (1 – 21.00%) = 0.01%
Total: 185,804 1.00 8.33%

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 158,682 158,682 ÷ 200,048 = 0.79 0.79 × 10.09% = 8.01%
Debt, including finance lease obligations3 40,752 40,752 ÷ 200,048 = 0.20 0.20 × 3.39% × (1 – 21.00%) = 0.55%
Operating lease liability4 614 614 ÷ 200,048 = 0.00 0.00 × 3.40% × (1 – 21.00%) = 0.01%
Total: 200,048 1.00 8.56%

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 167,319 167,319 ÷ 197,913 = 0.85 0.85 × 10.09% = 8.53%
Debt, including finance lease obligations3 30,058 30,058 ÷ 197,913 = 0.15 0.15 × 2.96% × (1 – 21.00%) = 0.36%
Operating lease liability4 536 536 ÷ 197,913 = 0.00 0.00 × 3.60% × (1 – 21.00%) = 0.01%
Total: 197,913 1.00 8.89%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 133,365 133,365 ÷ 169,757 = 0.79 0.79 × 10.09% = 7.93%
Debt, including finance lease obligations3 35,685 35,685 ÷ 169,757 = 0.21 0.21 × 2.83% × (1 – 21.00%) = 0.47%
Operating lease liability4 707 707 ÷ 169,757 = 0.00 0.00 × 4.30% × (1 – 21.00%) = 0.01%
Total: 169,757 1.00 8.41%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Philip Morris International Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 3,947 4,521 5,572 7,585 6,262
Invested capital2 48,390 51,440 47,466 29,268 31,958
Performance Ratio
Economic spread ratio3 8.16% 8.79% 11.74% 25.92% 19.59%
Benchmarks
Economic Spread Ratio, Competitors4
Coca-Cola Co. 2.64% 3.15% 2.84% 4.39% 2.21%
Mondelēz International Inc. 0.04% -0.12% -3.92% -0.92% -2.07%
PepsiCo Inc. 5.52% 4.44% 4.42% 4.97% 3.63%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 3,947 ÷ 48,390 = 8.16%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Philip Morris International Inc. economic spread ratio deteriorated from 2022 to 2023 and from 2023 to 2024.

Economic Profit Margin

Philip Morris International Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 3,947 4,521 5,572 7,585 6,262
Net revenues 37,878 35,174 31,762 31,405 28,694
Performance Ratio
Economic profit margin2 10.42% 12.85% 17.54% 24.15% 21.82%
Benchmarks
Economic Profit Margin, Competitors3
Coca-Cola Co. 4.88% 5.75% 5.27% 9.12% 5.07%
Mondelēz International Inc. 0.07% -0.20% -7.95% -1.97% -4.78%
PepsiCo Inc. 4.60% 3.64% 3.55% 4.36% 3.61%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenues
= 100 × 3,947 ÷ 37,878 = 10.42%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Philip Morris International Inc. economic profit margin deteriorated from 2022 to 2023 and from 2023 to 2024.