Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Philip Morris International Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 7.6% to 5.6% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 49, DPO 120, DIO 302). At a 6.4% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $201.38 per share, suggesting PM is undervalued by 23.1% at the current price of $163.56.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 14,446 | 15,313 | 16,328 | 16,540 | 17,462 | 17,898 |
| (−) Net Interest | 1,545 | 1,638 | 1,747 | 1,769 | 1,868 | 1,915 |
| (+) D&A | 1,232 | 1,383 | 1,487 | 1,563 | 1,619 | 1,659 |
| EBITDA | 17,223 | 18,334 | 19,561 | 19,872 | 20,948 | 21,472 |
| (−) Tax | 2,917 | 3,092 | 3,297 | 3,340 | 3,526 | — |
| (−) CapEx | 1,505 | 1,595 | 1,701 | 1,723 | 1,819 | — |
| (−) ΔWC | 520 | 805 | 941 | 197 | 855 | — |
| Free Cash Flow (FCF) | 12,280 | 12,842 | 13,622 | 14,612 | 14,748 | — |
| Peers' EBITDA Multiple | 19.0x | |||||
| Terminal Value | 407,969 | |||||
| WACC / Discount Rate | 6.37% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 11,907 | 11,706 | 11,672 | 11,771 | 11,168 | 299,541 |
| Enterprise Value | 357,765 | |||||
| Projection Period | 58,223 | 16.3% | ||||
| Terminal Value | 299,541 | 83.7% | ||||
| (−) Current Net Debt | 43,963 | |||||
| Equity Value | 313,802 | |||||
| (÷) Outstanding Shares | 1558M | |||||
| Fair Price | $201 | +23.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.0x | 17.0x | 19.0x | 21.0x | 23.0x |
|---|---|---|---|---|---|
| 4.4% | $178 | $200 | $222 | $245 | $267 |
| 5.4% | $169 | $190 | $212 | $233 | $254 |
| 6.4% | $161 | $181 | $201 | $222 | $242 |
| 7.4% | $153 | $172 | $192 | $211 | $230 |
| 8.4% | $146 | $164 | $183 | $201 | $219 |
Current price: $163.56. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.