Philip Morris International Inc. (PM) Discounted Future Market Cap

Philip Morris International Inc.

PM (NYSE)

(%)

Valuation
Philip Morris International Inc. Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	160.8 USD
Estimated net income	10.77 Bil. USD
Estimated market capitalization	335.8 Bil. USD
Market capitalization discounted to present	250.4 Bil. USD
Shares Outstanding	1.56 Bil.
Earnings Per Share (EPS)	5.53 USD
Market Price	172.3 USD
Price to Earnings (PE) Ratio	31.17

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2015", "x": "2015-12-31", "y": 26794000000}, {"l": "2016", "x": "2016-12-31", "y": 26685000000}, {"l": "2017", "x": "2017-12-31", "y": 28748000000}, {"l": "2018", "x": "2018-12-31", "y": 29625000000}, {"l": "2019", "x": "2019-12-31", "y": 29805000000}, {"l": "2020", "x": "2020-12-31", "y": 28694000000}, {"l": "2021", "x": "2021-12-31", "y": 31405000000}, {"l": "2022", "x": "2022-12-31", "y": 31762000000}, {"l": "2023", "x": "2023-12-31", "y": 35174000000}, {"l": "2024", "x": "2024-12-31", "y": 37878000000}, {"l": "2025", "x": "2025-12-31", "y": 38970401520, "oy": 38970401520, "e": true, "d": 2025, "g": 2.88, "og": 2.88}, {"l": "2026", "x": "2026-12-31", "y": 40094307899, "oy": 40094307899, "e": true, "d": 2026, "g": 2.88, "og": 2.88}, {"l": "2027", "x": "2027-12-31", "y": 41250627739, "oy": 41250627739, "e": true, "d": 2027, "g": 2.88, "og": 2.88}, {"l": "2028", "x": "2028-12-31", "y": 42440295843, "oy": 42440295843, "e": true, "d": 2028, "g": 2.88, "og": 2.88}, {"l": "2029", "x": "2029-12-31", "y": 43664273975, "oy": 43664273975, "e": true, "d": 2029, "g": 2.88, "og": 2.88}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2015", "x": "2015-12-31", "y": 6873000000}, {"l": "2016", "x": "2016-12-31", "y": 6967000000}, {"l": "2017", "x": "2017-12-31", "y": 6035000000}, {"l": "2018", "x": "2018-12-31", "y": 7911000000}, {"l": "2019", "x": "2019-12-31", "y": 7185000000}, {"l": "2020", "x": "2020-12-31", "y": 8056000000}, {"l": "2021", "x": "2021-12-31", "y": 9109000000}, {"l": "2022", "x": "2022-12-31", "y": 9048000000}, {"l": "2023", "x": "2023-12-31", "y": 7791000000}, {"l": "2024", "x": "2024-12-31", "y": 7034000000}, {"l": "2025", "x": "2025-12-31", "y": 9613998054, "oy": 9613998054, "e": true, "d": 2025, "g": 36.68, "og": 36.68}, {"l": "2026", "x": "2026-12-31", "y": 9891265758, "oy": 9891265758, "e": true, "d": 2026, "g": 2.88, "og": 2.88}, {"l": "2027", "x": "2027-12-31", "y": 10176529863, "oy": 10176529863, "e": true, "d": 2027, "g": 2.88, "og": 2.88}, {"l": "2028", "x": "2028-12-31", "y": 10470020984, "oy": 10470020984, "e": true, "d": 2028, "g": 2.88, "og": 2.88}, {"l": "2029", "x": "2029-12-31", "y": 10771976389, "oy": 10771976389, "e": true, "d": 2029, "g": 2.88, "og": 2.88}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2025-12-31": 25, "2026-12-31": 26, "2027-12-31": 27, "2028-12-31": 28, "2029-12-31": 29}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2025-12-31	2026-12-31	2027-12-31	2028-12-31	2029-12-31

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2024 Dec 31	LTM Jan 16	2025 Dec 31	2026 Dec 31	2027 Dec 31	2028 Dec 31	2029 Dec 31
Revenue	37,878	39,940	38,970	40,094	41,251	42,440	43,664
Revenue Growth Rate	7.69%	5.44%	2.88%	2.88%	2.88%	2.88%	2.88%
Net Income	7,034	8,612	9,614	9,891	10,177	10,470	10,772

Monetary values in USD

amounts except #

2024
Dec 31

LTM
Jan 16

2025
Dec 31

2026
Dec 31

2027
Dec 31

2028
Dec 31

2029
Dec 31

Revenue

37,878

39,940

38,970

40,094

41,251

42,440

43,664

Revenue Growth Rate

7.69%

5.44%

2.88%

Net Income

7,034

8,612

9,614

9,891

10,177

10,470

10,772

Historical Values

Monetary values in USD amounts except #	Average	LTM Jan 16	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31	2015 Dec 31
Revenue	31,501	39,940	37,878	35,174	31,762	31,405	28,694	29,805	29,625	28,748	26,685	26,794
Cost of Revenue	11,014	13,470	13,329	12,893	11,402	10,030	9,569	10,513	10,758	10,432	9,391	9,365
Gross Profit	20,487	26,470	24,549	22,281	20,360	21,375	19,125	19,292	18,867	18,316	17,294	17,429
Gross Margin	65.02%	66.27%	64.81%	63.35%	64.1%	68.06%	66.65%	64.73%	63.69%	63.71%	64.81%	65.05%
Operating Income	11,992	15,050	13,402	11,556	12,246	12,972	11,720	10,531	11,336	11,576	10,903	10,623
Operating Margin	38.27%	37.68%	35.38%	32.85%	38.56%	41.31%	40.84%	35.33%	38.26%	40.27%	40.86%	39.65%
Net Income	7,693	8,612	7,034	7,791	9,048	9,109	8,056	7,185	7,911	6,035	6,967	6,873
Net Margin	24.67%	21.56%	18.57%	22.15%	28.49%	29%	28.08%	24.11%	26.7%	20.99%	26.11%	25.65%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Jan 16	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31	2015 Dec 31
Revenue	31,501	39,940	37,878	35,174	31,762	31,405	28,694	29,805	29,625	28,748	26,685	26,794
Revenue Growth Rate	2.88%	5.44%	7.69%	10.74%	1.14%	9.45%	-3.73%	0.608%	3.05%	7.73%	-0.407%	-9.99%
Net Income	7,693	8,612	7,034	7,791	9,048	9,109	8,056	7,185	7,911	6,035	6,967	6,873
Net Margin	24.67%	21.56%	18.57%	22.15%	28.49%	29%	28.08%	24.11%	26.7%	20.99%	26.11%	25.65%
Net Income Growth Rate	2.27%	22.43%	-9.72%	-13.89%	-0.67%	13.07%	12.12%	-9.18%	31.09%	-13.38%	1.37%	-8.27%
Stockholders Equity	-11,598	-10,914	-11,750	-11,225	-8,957	-10,106	-12,567	-11,577	-12,459	-12,086	-12,688	-13,244
Equity Growth Rate	-0.689%	-7.12%	4.68%	25.32%	-11.37%	-19.58%	8.55%	-7.08%	3.09%	-4.75%	-4.2%	4.87%
Return on Invested Capital (ROIC)	42.77%	34.52%	31.13%	25.12%	31.83%	58.01%	51.23%	47.27%	54.65%	37.14%	48.87%	50.72%
After-tax Operating Income	9,176	12,531	10,787	9,008	9,911	10,174	9,180	8,121	8,753	6,894	7,890	7,685
Income Tax Rate	23.82%	16.74%	19.51%	22.05%	19.06%	21.57%	21.67%	22.88%	22.78%	40.45%	27.63%	27.65%
Invested Capital	23,316	36,305	34,653	35,861	31,138	17,539	17,920	17,181	16,017	18,559	16,145	15,153