Why Philip Morris’s 2Q17 Earnings Missed Analysts’ Estimates

2Q17 EPS

In 2Q17, Philip Morris International (PM) posted adjusted EPS (earnings per share) of $1.14, which represents a 0.9% fall from $1.15 in 2Q16. Analysts expected the company to post adjusted EPS of $1.23.

Why Philip Morris’s 2Q17 Earnings Missed Analysts’ Estimates

The fall in Philip Morris’s net margins offset its rising revenue growth of 4.0% to post lower-than-expected 2Q17 EPS. The company has not repurchased any shares in the last four quarters and stated that it doesn’t intend to repurchase any shares in 2017.

From the chart above, we can see that the company has outperformed analysts’ estimates only once in the last five quarters. When a company fails to meet analysts’ expectations, its stock price tends to fall. On July 20, 2017, Philip Morris’s stock price fell 1.4%.

Peer comparisons and outlook

In 2Q17, analysts expect Reynolds American (RAI) and Altria Group (MO) to post EPS growth of 10.2% and 6.2%, respectively.

After posting lower-than-expected 2Q17 earnings, Philip Morris lowered its 2017 EPS guidance to $4.78–$4.93 from an earlier estimate of $4.84–$4.99. This guidance includes $0.14 of unfavorable currency effects.

For the next four quarters, analysts expect Philip Morris to post EPS of $5.15, which represents 15.2% growth from $4.47 in the corresponding quarters of the previous year.

Dividends

Philip Morris (PM) announced quarterly dividends of $1.04 per share on June 9, 2017. The dividends were paid at a yield of 3.5% and a payout ratio of 85.1%.

For the next two quarters, analysts expect the company to pay dividends of $2.14 to take the total for 2017 to $4.22, which represents 2.4% growth from $4.12 in 2016.

Next, we’ll look at Philip Morris’s valuation multiple.