Philip Morris Stock Fell on Reduced 2Q17 Earnings Guidance



2Q17 performance

Philip Morris International (PM) posted its 2Q17 earnings on July 20, 2017. The company posted adjusted EPS (earnings per share) of $1.14 on net revenues of ~$6.9 billion. Compared to 2Q16, the company’s EPS fell 0.9%, and its net revenues rose 4.0%.

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Stock performance

Analysts expected Philip Morris (PM) to post EPS of $1.23 on revenues of ~$7.1 billion. The weakness in cigarette shipments and unfavorable currency exchange led Philip Morris to post lower-than-expected revenues and EPS.

After posting lower-than-expected EPS, the company’s management lowered its 2017 EPS guidance to $4.78–$4.93 from $4.84–$4.99, which includes $0.14 of unfavorable currency effects. The lower-than-expected 2Q17 EPS and its reduced 2017 EPS guidance appear to have led to a decline in Philip Morris’s stock price.

On July 24, 2017, the company was trading at $118.89, which represents a fall of 2.2% since the announcement of its 2Q17 earnings.

Year-to-date performance

Despite its recent decline, Philip Morris (PM) has returned 29.9% since the beginning of 2017. During the same period, Altria Group (MO) and Reynolds American (RAI) have returned 7.4% and 16.7%, respectively.

The Consumer Staples Select Sector SPDR ETF (XLP) and the S&P 500 Index (SPX) have returned 6.2% and 10.3% year-to-date, respectively. XLP invests 19.7% of its holdings in cigarette and tobacco companies.

Series overview

In this series, we’ll look at Philip Morris’s 2Q17 performance and its management’s guidance for 2017. We’ll also cover analysts’ estimates for the next four quarters. We’ll wrap this series up by looking at the company’s valuation multiple and analysts’ recommendations.

Let’s start by looking at Philip Morris’s 2Q17 revenues.


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