Philip Morris - A Stock For Wealth Or Poverty (MO) Message Board

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Non-Tech : Philip Morris - A Stock For Wealth Or Poverty (MO)

MO 58.69

+0.6%

Nov 26 3:59 PM EST

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To: RWilson who wrote (1354)	4/10/1998 12:31:00 AM
From: Rarebird	Read Replies (2) of 6439

RW: Here are some estimates I'm working with which show ( I think ) how cheap MO is today: 1998: $3.24 1999: $3.63 5 Year Projected EPS Growth Rate: 15% Phillip Morris is selling today at about 12.7 times 98 earnings estimate. Let's compare this to Procter & Gamble and Clorox: P&G is selling at about 33 times its 98 estimate and Clorox is selling for about 31 times its 98 estimate. If MO sold at P&G's PE ratio, we'd see a $100 share price today! Moreover, P&G's 5 Year Projected growth rate is 13% - below MO. To be sure, MO is not growing at the same rate it was 5 years ago. But its earnings are consistent and it never disappoints the street. Moreover, it's dividend of $1.60 a share is attractive. Whether the tobacco industry should have ever agreed to a settlement with the states is an entirely different question. One thing is for sure: the vast majority of individual investors in the States have cashed out of Phillip Morris. Perhaps the reasoning behind the settlement was to win back its previous shareholders and attract new ones. In short: I think the decision to settle was pragmatic, money and a more attractive share price. Clearly, the present litigation environment is not conducive to a much higher stock price. There are to many lawsuits on the horizon and with it RISK! Paying for liability protection and not being held responsible for future teenage smoking takes most of the risk out of the stock. The PE will expand and MO should at least double in a year. This is what the market pays for a great consumer products company. Although I'm highly theoretical, I see no point debating on these high grounds and principles. There is too much money involved here for the Government AND Tobacco industry not to settle. Make no mistake about it: it's in every one's interest to obtain a settlement. The Mcain bill was merely the first stage of negotiation. It has to get modified to the point where everyone can profit, including the CEO's and shareholders.

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