Philip Morris International (NYSE:PM) vs. Universal (NYSE:UVV) Financial Analysis

Universal (NYSE:UVV) and Philip Morris International (NYSE:PM) are both consumer staples companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

This table compares Universal and Philip Morris International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Universal	3.51%	8.46%	4.10%
Philip Morris International	9.33%	-122.14%	17.59%

Institutional & Insider Ownership

81.0% of Universal shares are held by institutional investors. Comparatively, 78.6% of Philip Morris International shares are held by institutional investors. 1.9% of Universal shares are held by company insiders. Comparatively, 0.1% of Philip Morris International shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Universal and Philip Morris International”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Universal	$2.99 billion	0.44	$95.05 million	$4.44	11.79
Philip Morris International	$89.44 billion	2.68	$7.06 billion	$5.52	27.85

Philip Morris International has higher revenue and earnings than Universal. Universal is trading at a lower price-to-earnings ratio than Philip Morris International, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for Universal and Philip Morris International, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Universal	0	1	0	1	3.00
Philip Morris International	0	1	12	0	2.92

Philip Morris International has a consensus target price of $189.56, suggesting a potential upside of 23.31%. Given Philip Morris International’s higher possible upside, analysts clearly believe Philip Morris International is more favorable than Universal.

Dividends

Universal pays an annual dividend of $3.28 per share and has a dividend yield of 6.3%. Philip Morris International pays an annual dividend of $5.88 per share and has a dividend yield of 3.8%. Universal pays out 73.9% of its earnings in the form of a dividend. Philip Morris International pays out 106.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Universal has increased its dividend for 56 consecutive years and Philip Morris International has increased its dividend for 17 consecutive years. Universal is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Universal has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Philip Morris International has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500.

About Universal

Universal Corporation processes and supplies leaf tobacco and plant-based ingredients worldwide. The company operates through two segments, Tobacco Operations; and Ingredients Operations. It is involved in the procuring, financing, processing, packing, storing, and shipping leaf tobacco for sale to manufacturers of consumer tobacco products. The company contracts, purchases, processes, and sells flue-cured, burley, and oriental tobaccos that are primarily used in the manufacture of cigarettes; and dark air-cured tobaccos principally used in the manufacture of cigars, natural wrapped cigars and cigarillos, smokeless, and pipe tobacco products. It also provides value-added services, including blending, chemical, and physical testing of tobacco; service cutting for various manufacturers; manufacturing reconstituted leaf tobacco; just-in-time inventory management services; electronic nicotine delivery systems; and smoke testing services for customers. In addition, the company offers testing services for crop protection agents and tobacco constituents in seed, leaf, and finished products, including e-cigarette liquids and vapors; and analytical services that include chemical compound testing in finished tobacco products and mainstream smoke. Further, it provides a various value-added manufacturing processes to produce specialty vegetable and fruit-based ingredients, as well as botanical extracts and flavorings for human and pet food markets; and recycles waste materials from tobacco production. Universal Corporation was founded in 1886 and is headquartered in Richmond, Virginia.

About Philip Morris International

Philip Morris International Inc. operates as a tobacco company working to delivers a smoke-free future and evolving portfolio for the long-term to include products outside of the tobacco and nicotine sector. The company's product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor, and oral nicotine products primarily under the IQOS and ZYN brands; and consumer accessories, such as lighters and matches. It also offers wellness and healthcare products. Philip Morris International Inc. was incorporated in 1987 and is headquartered in Stamford, Connecticut.