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Could Philip Morris’s Q2 2018 Earnings Boost Its Stock Price?

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Stock performance

Philip Morris International (PM) is scheduled to announce its second-quarter earnings before the market opens on July 19. On July 11, PM stock was trading at $82.84, which represents a fall of 18.3% since the announcement of its first-quarter earnings on April 19.

In the first quarter, Philip Morris posted adjusted EPS of $1.00 on revenues of $6.9 billion. Analysts expected the company to post EPS of $0.90 on revenues of $7.0 billion. 

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Despite outperforming analysts’ EPS expectations, PM’s stock price declined due to lower cigarette shipment volumes and slowing iQOS sales growth in Japan. The deceleration in sales of iQOS in Japan appears to have made investors skeptical of its long-term potential, which led to a decline in the company’s stock price.

Year-to-date performance

Philip Morris (PM) returned 15.5% in 2017. However, the company has lost 21.6% of its stock value since the beginning of 2018. The increase in anti-tobacco regulations, a declining number of smokers, and rising competition in RRP (reduced-risk products) led PM’s stock price to fall. 

Year-to-date, the stock prices of peers Altria Group (MO) and British American Tobacco (BTI) have fallen 17.8% and 23.3%, respectively. The S&P 500 Index (SPX) and the Consumer Staples Select Sector SPDR ETF (XLP) have returned 3.8% and -7.8%, respectively, year-to-date.

Series overview

With Philip Morris’s second-quarter earnings around the corner, we’ll look at analysts’ revenues and EPS expectations. We’ll also cover its management’s guidance for 2018. We’ll conclude this series by looking at the company’s valuation multiples and analysts’ recommendations.

Let’s start by looking at analysts’ revenue expectations for the second quarter.

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