Philip Morris: Is It Time To Quit?

1/12/18

At the beginning of the New Year, Philip Morris (PM) made the announcement that they were quitting smoking. However, they are not giving up tobacco. The company is trying to switch from the traditional combustion cigarette to the more modern 'vaping'. The purpose of this is to catch health trends that continue to gain traction and help combat its decreasing cigarette volume. While this initiative may be a great social justice, is this a good, long-term move for the company?

It may be too early to say for sure, but focusing on e-cigarettes may be a smart move by management. Growth rates may not adjust for a few months to see what steps the company will take to enact this initiative, and see how sales perform in the next few quarters. It is important to note, Philip Morris announced this in the UK and this is not going global, not yet. While the valuation may not be attractive currently, if PM experiences a pullback during their testing phase it may provide an opportunity to jump in on a strong, global company that pays an attractive quarterly dividend.

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