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Philip Morris Stock Fell despite Strong Q1 Results

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Stock performance

Philip Morris International (PM) outperformed analysts’ revenue and EPS expectations in the first quarter. Despite strong first-quarter results, the company was trading in the red early on April 18. The company’s management lowered its adjusted EPS guidance for 2019 to $5.09 due to the higher impact from the consolidation of its Canadian subsidiary. At 10:20 AM EST, Philip Morris was trading at $83.19—a fall of ~2.7% from the previous day’s closing price.

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Year-to-date performance

So far, 2019 has been good for Philip Morris. The company has returned 28.0% YTD (year-to-date) as of April 17. The strong fourth-quarter earnings, higher expectations for the next generation of IQOS devices, and the stronger broader equity market led to a rise in the company’s stock price. During the same period, Altria Group (MO) and British American Tobacco (BTI) have returned 13.7% and 26.7%, respectively. The broader equity market, the Consumer Staples Select Sector SPDR ETF (XLP), which invests in tobacco and cigarette companies, has returned 11.9%.

Valuation multiple

The increase in Philip Morris’s stock price since the beginning of 2019 has also raised its valuation multiple. As of April 17, the company was trading at a forward PE ratio of 16.3x—compared to 12.6x at the beginning of 2019. On April 17, Altria was trading at a forward PE ratio of 13.1x.

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