Buffett Brain · Research note
Score updated 22 Oct 2026 · analysis from 2 Jun 2026
PM· Consumer Staples
Philip Morris International
Philip Morris owns one of the great pricing machines in consumer goods, yet at 25 times earnings the price asks you to pay up for a habit the world keeps trying to quit.
Buffett fit
Strong fit
Owner
100
Durability
74
Management
82
Price
32
Score updated 22 Oct 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Consumer Staples stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned this whole company outright, I would admire the cash it throws off.
The full reasoning comes with a free account.
The brand is as durable as brands get, and a 29.8 percent five-year return on capital shows it has stayed that way through cycles.
The full reasoning comes with a free account.
Management has run this place with discipline. The share count has barely moved, shrinking 0.03 percent a year, so per-share value is not being diluted away.
The full reasoning comes with a free account.
Here is where I step back. At 25.2 times earnings the yield is just 3.8 percent, which is barely better than a government bond for a business in slow secular decline.
The full reasoning comes with a free account.
Free account
Read the full Philip Morris International analysis free
- The full reasoning behind all four pillars
- Graham, Lynch and Greenblatt on the same stock
3 full analyses a week · no card needed
For and against
The strongest points on each side, with the numbers behind them.
In its favor
7- 1Exceptional profitability with a 67.3 percent and a 36.8 percent , among the best in consumer staples.
- 2 of 24.3 percent, and a 29.8 percent five-year average, proving the brand earns far above its cost of capital.
- 3 equal 94 percent of net income, so reported profit is backed by real cash flow.
- 4Disciplined with the share count down 0.03 percent a year, no creeping dilution.
Concerns
7- 1The valuation is steep: 25.2 times earnings and a 21.8 times EV to operating profit leave an yield of just 3.8 percent, no .
- 2Financial health scores only 44 of 100, dragged down by negative book equity and a balance sheet with little cushion.
- 3Net debt sits at 2.6 times EBITDA, manageable today but a liability if cash flows ever wobble.
- 4The current ratio of 0.98 is below one, meaning short-term obligations slightly exceed liquid assets.
Price history
$197+103.8%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Philip Morris sells cigarettes and, increasingly, smoke-free products like IQOS and Zyn to a loyal base that pays whatever the company asks. The economics are extraordinary: a 67.3 percent and a 36.8 percent mean most of every extra dollar of revenue falls to the bottom line. Revenue has compounded at 6.7 percent and earnings at 5.7 percent, slow but dependable growth funded by addiction and brand.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 21, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Consumer Staples
Questions about Philip Morris International
Free weekly email
Liked the read on PM? Get the next ones on Monday.
Every Monday: the stocks most of the seven investors newly agree on. One email, unsubscribe any time.
Research, not investment advice.
See the Buffett analysis of Philip Morris International
The score, the checklist and the full reasoning open with a free account. You get 3 full analyses a week, and this stock is the first one. No card needed.
Create a free account3 full analyses a week · no card needed
Already have an account? Sign in