Philip Morris International (NYSE: PM) and British American Tobacco p.l.c. (NYSE:BTI) are both large-cap consumer staples companies, but which is the better investment? We will compare the two businesses based on the strength of their profitabiliy, risk, analyst recommendations, earnings, valuation, dividends and institutional ownership.

Dividends

Philip Morris International pays an annual dividend of $4.16 per share and has a dividend yield of 3.6%. British American Tobacco p.l.c. pays an annual dividend of $2.18 per share and has a dividend yield of 3.3%. Philip Morris International pays out 92.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. British American Tobacco p.l.c. has increased its dividend for 9 consecutive years.

Volatility and Risk

Philip Morris International has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, British American Tobacco p.l.c. has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Philip Morris International and British American Tobacco p.l.c., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Philip Morris International 0 4 7 0 2.64
British American Tobacco p.l.c. 0 0 6 0 3.00

Philip Morris International currently has a consensus target price of $120.55, suggesting a potential upside of 5.04%. British American Tobacco p.l.c. has a consensus target price of $69.00, suggesting a potential upside of 4.75%. Given Philip Morris International’s higher possible upside, equities analysts plainly believe Philip Morris International is more favorable than British American Tobacco p.l.c..

Profitability

This table compares Philip Morris International and British American Tobacco p.l.c.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Philip Morris International 9.36% -66.18% 18.84%
British American Tobacco p.l.c. N/A N/A N/A

Insider and Institutional Ownership

72.5% of Philip Morris International shares are held by institutional investors. Comparatively, 5.6% of British American Tobacco p.l.c. shares are held by institutional investors. 0.2% of Philip Morris International shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Philip Morris International and British American Tobacco p.l.c.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Philip Morris International $26.93 billion 6.62 $11.50 billion $4.51 25.45
British American Tobacco p.l.c. $20.48 billion 5.98 $8.09 billion N/A N/A

Philip Morris International has higher revenue and earnings than British American Tobacco p.l.c..

Summary

Philip Morris International beats British American Tobacco p.l.c. on 10 of the 15 factors compared between the two stocks.

Philip Morris International Company Profile

Philip Morris International Inc. is a holding company. The Company is engaged in the manufacture and sale of cigarettes, other tobacco products and other nicotine-containing products in markets outside of the United States. Its segments include European Union (EU); Eastern Europe, Middle East & Africa (EEMA); Asia, and Latin America & Canada. The Company’s portfolio of international and local brands is led by Marlboro. Its mid-price brands are L&M, Lark, Merit, Muratti and Philip Morris. Its other international brands include Bond Street, Chesterfield, Next and Red & White. The Company also owns various local cigarette brands, such as Dji Sam Soe, Sampoerna and U Mild in Indonesia; Champion, Fortune and Jackpot in the Philippines; Apollo-Soyuz and Optima in Russia; Morven Gold in Pakistan; Boston in Colombia; Belmont, Canadian Classics and Number 7 in Canada; f6 in Germany; Delicados in Mexico; Assos in Greece, and Petra in the Czech Republic and Slovakia.

British American Tobacco p.l.c. Company Profile

British American Tobacco p.l.c. is a tobacco and next generation products company. The Company’s tobacco product range includes cigarettes, fine cut (roll-your-own and make-your-own tobacco) and Swedish-style snus. Its segments include Asia-Pacific, Americas, Western Europe, and Eastern Europe, Middle East and Africa (EEMEA). The Asia-Pacific segment includes its operations in various countries, including Australia, Pakistan, Malaysia, Vietnam, Japan, South Korea, Indonesia, New Zealand and Bangladesh. The Americas segment includes its operations in various countries, including Brazil, Mexico, Canada, Colombia, Argentina, Chile and Venezuela. The Western Europe segment includes its operations in various countries, including Germany, Denmark, Switzerland, Belgium, France, the United Kingdom, Romania, Spain, Italy, Poland and Croatia/Balkans. The EEMEA segment includes its operations in various countries, including Russia, Ukraine, South Africa, Turkey, Egypt, Nigeria and Algeria.

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