Validea Detailed Fundamental Analysis

Validea's guru fundamental report on Philip Morris International (PM) indicates the large-cap tobacco stock received a 70% rating from Joel Greenblatt's Earnings Yield Investor model. While this was the highest score among 22 strategies, it falls below the 80% threshold for "some interest" and 90% for "strong interest" in Greenblatt's value-oriented "Magic Formula" strategy, known for its historical outperformance. Key fundamental criteria like Earnings Yield and Return on Tangible Capital were rated "Neutral," leading to a "FAIL" on the model's final ranking, suggesting PM does not meet the investment criteria of this historically high-performing strategy.

Analysis

According to a Validea fundamental report, Philip Morris International (PM) does not meet the criteria of Joel Greenblatt's historically successful "Magic Formula" investment strategy. The large-cap tobacco company received a score of 70% from the model, which is below the 80% threshold indicating initial interest and well short of the 90% level for strong interest. This assessment is based on the company's performance against the model's two primary variables, with PM receiving only "Neutral" ratings for both its Earnings Yield and Return on Tangible Capital. Consequently, the stock receives a final ranking of "FAIL" from this specific value-oriented strategy, suggesting its current fundamentals and valuation do not present the combination of high quality and attractive price that the model seeks.

Key Decisions for Investors

• Investors following quantitative value strategies should view the 'FAIL' rating from Greenblatt's model as a significant red flag, as PM's fundamentals do not meet the criteria of this historically high-performing system.
• Given the 'Neutral' ratings on both Earnings Yield and Return on Tangible Capital, investors should scrutinize PM's capital efficiency and valuation, as it appears to lack the compelling value characteristics sought by the model.
• While this single model's view is not definitive, the 70% score warrants caution and suggests that potential upside may be limited for investors prioritizing a 'deep value' approach.