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Philip Morris (PM) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Philip Morris (PM) closed at $81.89, marking a +0.78% move from the previous day. This move outpaced the S&P 500's daily gain of 0.46%. Elsewhere, the Dow gained 0.9%, while the tech-heavy Nasdaq added 0.59%.

Coming into today, shares of the seller of Marlboro and other cigarette brands had gained 4.73% in the past month. In that same time, the Consumer Staples sector gained 0.77%, while the S&P 500 gained 4.04%.

Wall Street will be looking for positivity from PM as it approaches its next earnings report date. This is expected to be July 18, 2019. In that report, analysts expect PM to post earnings of $1.32 per share. This would mark a year-over-year decline of 6.38%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.35 billion, down 4.84% from the year-ago period.

PM's full-year Zacks Consensus Estimates are calling for earnings of $5.15 per share and revenue of $29.44 billion. These results would represent year-over-year changes of +0.98% and -0.62%, respectively.

Investors should also note any recent changes to analyst estimates for PM. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.03% higher. PM is currently a Zacks Rank #3 (Hold).

In terms of valuation, PM is currently trading at a Forward P/E ratio of 15.79. This valuation marks a premium compared to its industry's average Forward P/E of 12.07.

We can also see that PM currently has a PEG ratio of 2.05. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Tobacco stocks are, on average, holding a PEG ratio of 1.54 based on yesterday's closing prices.

The Tobacco industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 165, putting it in the bottom 36% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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