Can We Expect Philip Morris’s Upward Momentum to Continue?

PM’s performance

On November 29, Philip Morris International (PM) was trading at $86.96, which represents an increase of 2.8% since its announcement of its third-quarter earnings results on October 18.

The company is trading 14.1% higher than its 52-week low of $76.21 and 21.8% lower than its 52-week high of $111.25.

Can We Expect Philip Morris’s Upward Momentum to Continue?

In the third quarter, Philip Morris posted adjusted EPS of $1.44 on revenue of $7.50 billion, outperforming analysts’ EPS expectation of $1.28 and their revenue estimate of $7.17 billion. Impressive growth in heated tobacco unit sales helped the company outperform analysts’ sales estimates.

The company’s shipment volumes of heated tobacco units grew in all regions except in its East Asia & Australia region, where net unfavorable estimated distributor inventory movements in Japan led to a fall in total shipment volumes. Strong third-quarter results led to a rise in the company’s stock price. Also, the company’s launch of its next-generation IQOS products on October 22 positively impacted its stock price.

Year-to-date performance

YTD (year-to-date), Philip Morris stock has fallen 17.7%. Increased regulations and excise tax, a declining number of smokers, and rising competition in the reduced-risk products space have been putting pressure on the company’s stock price.

In comparison, the stock prices of its peers Altria Group (MO) and British American Tobacco (BTI) have fallen 21.7% and 47.0%, respectively, during the same period. The stock price of the Consumer Staples Select Sector SPDR ETF (XLP), which has invested 11.9% of its holdings in tobacco and cigarette companies, has fallen 6.0% YTD.

Next, we’ll look at analysts’ EPS expectations for PM over the next four quarters.