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Philip Morris’s Share Price Rose on Its Positive Outlook

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Oct. 24 2016, Updated 10:03 a.m. ET

Stock performance

Since the announcement of its 3Q16 results on October 18, 2016, Philip Morris International’s (PM) share price has risen 0.8% to $96.3. 

Expectations of improvements in Philip Morris’s revenue and earnings per share (or EPS) in 4Q16 have raised investors’ confidence, leading to a rise in its share price.

During the company’s 3Q16 earnings call, its management stated that the growth in its reduced-risk products (or RRP) and the annualization of its price rises are expected to drive its revenue in 4Q16.

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Also in 4Q15, the company made huge investments in the iQOS smokeless cigarette and in the implementation of the EU Tobacco Products Directive. So, with favorable cost comparisons, Philip Morris is expected to post strong 4Q16 earnings. These projections have led to the rise in Philip Morris’s share price.

Year-to-date performance

Since the beginning of 2016, Philip Morris’s share price has delivered a return of 9.7%. During the same period, Altria Group (MO) and Reynolds American (RAI) have returned 8% and 2.6%, respectively.

By comparison, the broader comparative index, the First Trust Morningstar Dividend Leaders Index ETF (FDL), has returned 12.6% year-to-date. FDL has 10.6% of its holdings invested in tobacco and cigarette companies.

Series overview

In this series, we’ll be taking a look at Philip Morris’ 3Q16 performance. We’ll compare it with the company’s performance in the same quarter last year. We’ll also explore the factors that could drive the company’s revenue, margins, and EPS in the coming quarters. Finally, we’ll look at the company’s valuation multiple and analysts’ estimates and recommendations.

Let’s start by looking at Philip Morris’s 3Q16 revenue.

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