An Insider Bought Another Pack of Philip Morris International

British American Tobacco PLC (NYSE:BTI), Altria, Reynolds American, Inc. (NYSE:RAI), and Lorillard Inc. (NYSE:LO) are other large cigarette companies. British American trades at 20 times consensus earnings for 2013, and forward P/Es for the other three companies are in the 12-13 range (though in many cases, as at Philip Morris International, Wall Street analysts are predicting a quite high growth rate of earnings per share). So really it’s difficult to back any player in the industry from a pure value perspective, and certainly in the mature cigarette business revenue growth rates tend to be low. Altria, Lorillard, and Reynolds American do pay dividend yields of 5% or higher, and with betas of about 0.4 as well we like them for income or defensive investors.

Philip Morris International falls short of those three companies in terms of its dividend payments, and its earnings per share growth over the last year has primarily come through reduced share count rather than an improving business. With its earnings multiples being high in terms of a value stock we think that there may be better choices in the industry for the right type of investor.

Disclosure: I own no shares of any stocks mentioned in this article.