Why Philip Morris’s Stock Price Rose after 4Q17 Earnings



4Q17 performance

Philip Morris International (PM) posted its 4Q17 earnings before the market opened on February 8. The company posted adjusted EPS (earnings per share) of $1.31 on net revenues, excluding excise taxes, of $8.29 billion. Compared to 4Q16, the company’s adjusted EPS increased 19.1% while 4Q17 revenue increased 19.0%.

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Stock performance

Analysts were expecting Philip Morris to post adjusted EPS of $1.36 on revenues of $8.17 billion. Despite posting lower-than-expected 4Q17 earnings, the company’s stock price increased due to an increase of 3.8% in total shipment volume and better-than-expected 4Q17 net revenue. By the end of February 8, the company was trading at $100.39, which represents growth of 1.5% from its previous day’s closing price.

Year-to-date performance

In 2017, Philip Morris’s stock returned 15.5%. However, since the beginning of 2018, the company’s stock price has fallen 5.0%. Comparatively, the stock price of Philip Morris’s peers, Altria Group (MO) and British American Tobacco (BTI), have fallen 10.3%, and 7.3%, year-to-date, respectively. Also, the broader comparative indices, the S&P 500 Index (SPX) and the Consumer Staples Select Sector SPDR Fund, have returned -3.5%, and -5.8% since the beginning of 2018. XLP has invested 13.1% of its holdings in cigarettes and tobacco companies.

Series overview

In this series, we’ll look at Philip Morris’s 4Q17 performance by comparing it with analysts’ estimates. We’ll also look at analysts’ estimates and management’s guidance for 2018. Finally, we’ll end this series by looking at the company’s valuation multiple and analysts’ recommendations.

Next, we’ll look at Philip Morris’s 4Q17 revenue.


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