Will Philip Morris’s Q4 Earnings Boost Its Stock Price?

Stock performance

Philip Morris International (PM) is scheduled to post its fourth-quarter earnings results before the market opens on February 7. As of February 1, the stock was trading at $75.73, which represents a fall of 10.3% since its announcement of its third-quarter earnings results on October 18.

Will Philip Morris’s Q4 Earnings Boost Its Stock Price?

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 expectation of $7.17 billion. Despite its strong third-quarter earnings results, Philip Morris’s stock price fell due to its downgrade by Credit Suisse in December on concerns about the growing popularity of e-cigarettes.

On December 20, Altria (MO) announced a $12.8 billion investment in Juul for a 35% stake in the e-cigarette manufacturer. The investment has been seen by investors as Altria’s lack of confidence in Philip Morris’s IQOS, leading to a fall in Philip Morris stock. IQOS will be marketed by Altria in the United States following the FDA’s approval.

Year-to-date performance

Last year, Philip Morris lost 36.8% of its share value due to declines in cigarette shipment volumes in the first three quarters of 2018 and slower IQOS sales growth in Japan. However, this year, the company has started on a positive note, with its stock price rising 13.4% YTD (year-to-date) as of February 1. In comparison, its peers Altria Group (MO) and British American Tobacco (BTI) have returned 0.4% and 11.4%, respectively, during the same period. The stock price of the Consumer Staples Select Sector SPDR ETF (XLP), which has 8.4% of its holdings in tobacco and cigarette companies, has risen 4.8%.

Series overview

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

Let’s look at analysts’ fourth-quarter revenue expectations.