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Philip Morris International, Inc. Message Board

  • sage533 sage533 Feb 27, 2009 2:35 PM Flag

    Free cash flow

    PM has $6.8 billion of annual free cash flow after capex of $1.1B. The dividend is $4.5 Billion. They are using the excess to buy back shares--about $2B, which would retire 3% of the outstanding each year--thus adding 3% to e.p.s. growth. This is from the 10-k. If they decided to pay out all free cash flow, the dividend would be $3.35 and the yield would be 10% plus 3% from shares retired, plus 2% from capex, plus unit growth of 4% for a total of 19% annual return. Am I wrong? People smoke more when under duress as reported by the WSJ today.

    PMI forecasts 2009 full-year diluted earnings per share to a range of $2.85 to $3.00, at current exchange rates, versus $3.32 in 2008. Excluding an adverse currency impact of $0.80 per share, 2009 guidance is projected to increase by 10%-14%. This guidance excludes the impact of any potential future acquisition. Without currency, their guidance reinforces this view of high double digit growth.

    It is pretty clear that the dollar cannot strengthen forever. In fact our massive stimulation should lead to inflation and a weakening of U.S. currency. So this is an infaltion hedge. PM will not sit on its hands. Don't you think they will raise prices in local currency.

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