Why Wall Street Expects Philip Morris’s EPS to Rise in 2019

Analysts’ EPS expectations

For 2019, analysts expect Philip Morris International (PM) to post EPS of $5.39 in 2019, which represents growth of 5.7% from $5.10 in 2018. EPS growth is expected to be driven by revenue growth and net margin expansion.

Excluding an unfavorable currency translation impact of ~$0.14, Philip Morris’s management expects adjusted EPS to rise 8.0% in 2019 from $5.10 in 2018.

Why Wall Street Expects Philip Morris’s EPS to Rise in 2019

Analysts expect Philip Morris’s net margin to improve from 26.8% in 2018 to 27.4%. The expansion is likely to be driven by favorable pricing variance, the company’s initiatives to improve productivity, and cost reduction opportunities. Also, analysts expect the company’s interest expenses to fall from 2.2% of the total revenue to 1.9%. However, some of the increase in EPS is likely to be offset by a higher effective tax rate. Analysts expect the company’s 2019 effective tax rate at 23.2%, compared to 22.9% in 2018.

Peer comparisons

For 2019, analysts expect Altria Group (MO) to post adjusted EPS of $4.20, which represents growth of 5.2% from $3.99 in 2018.

Dividends

Philip Morris announced quarterly dividends of $1.14 per share on December 6, which represents an annualized payout of $4.56. As of February 25, the company’s dividend yield stood at 5.27%, with its stock price trading at $86.60. On the same day, the dividend yield for Altria stood at 6.17%.

Philip Morris is scheduled to announce its next quarterly dividend on March 6 to be paid on April 11 to shareholders recorded as of March 26.