Moody’s Affirmed Philip Morris’s Ratings

Philip Morris International (PM) has a market cap of $155.4 billion. It rose by 0.78% to close at $99.17 per share on August 10, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.14%, -3.6%, and 15.1%, respectively, on the same day.

PM is trading 0.89% below its 20-day moving average, 0.99% below its 50-day moving average, and 6.6% above its 200-day moving average.

The iShares Russell Top 200 Value ETF (IWX) invests 0.99% of its holdings in Philip Morris. The ETF tracks an index of US large-cap value stocks. The index selects from stocks ranked 1–200 by market cap based on two style factors. The YTD price movement of IWX was 6.1% on August 10.

The market caps of Philip Morris’s competitors are as follows:

• Altria Group (MO) — $132.0 billion
• Reynolds American (RAI) — $72.4 billion
• Vector Group (VGR) — $2.7 billion

Moody’s Investors Service has affirmed the following ratings of Philip Morris International:

• Long-term issuer rating of A2
• Senior unsecured rating of A2
• Short-term ratings for commercial paper of Prime-1 (P-1)

Moody’s rated the stock outlook as stable.

Philip Morris reported 2Q16 net revenues of $19.0 billion, a rise of 1.1% compared to net revenues of $18.8 billion in 2Q15. Net revenues, which exclude excise taxes from the European Union, rose by 4.6%. Net revenues from EEMA (Eastern Europe, Middle East, and Africa region), Asia, and Latin America and Canada fell by 9.9%, 0.6%, and 13.6%, respectively, in 2Q16 compared to 2Q15.

Its cigarette shipment volume in the European Union, EEMA, Asia, and Latin America and Canada fell by 0.8%, 4.0%, 7.9%, and 5.9%, respectively, in 2Q16 compared to 2Q15.

The company’s gross profit margin and operating income fell by 5.8% and 4.8%, respectively, in 2Q16 compared to 2Q15. Its net income and EPS (earnings per share) fell to $1.8 billion and $1.15, respectively, in 2Q16 compared to $1.9 billion and $1.21, respectively, in 2Q15.

PM’s cash and cash equivalents rose by 11.6% in 2Q16 compared to 4Q15. The company reported free cash flow excluding currency of $2.7 billion in 2Q16, a fall of 22.9% compared to 2Q15.

The company projects EPS in the range of $4.45–$4.55, which does not include any share repurchases in 2016. This projection also excludes the impact of any future acquisitions, future changes in currency exchange rates, unanticipated asset impairment and exit cost charges, and any unusual events.

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