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

Zacks Equity Research
Synopsys (SNPS) delivered earnings and revenue surprises of 6.42% and 1.10%, respectively, for the quarter ended April 2019. Do the numbers hold clues to what lies ahead for the stock?

Philip Morris (PM) closed the most recent trading day at $88.39, moving +1.27% from the previous trading session. This change outpaced the S&P 500's 0.67% gain on the day. Elsewhere, the Dow gained 0.82%, while the tech-heavy Nasdaq added 0.78%.

Prior to today's trading, shares of the seller of Marlboro and other cigarette brands had gained 0.39% over the past month. This has lagged the Consumer Staples sector's gain of 4.42% and the S&P 500's gain of 1.25% in that time.

Investors will be hoping for strength from PM as it approaches its next earnings release. On that day, PM is projected to report earnings of $1.01 per share, which would represent year-over-year growth of 1%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.73 billion, down 2.45% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.36 per share and revenue of $30.43 billion. These totals would mark changes of +5.1% and +2.7%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for PM. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.08% lower. PM is currently a Zacks Rank #3 (Hold).

In terms of valuation, PM is currently trading at a Forward P/E ratio of 16.3. This represents a premium compared to its industry's average Forward P/E of 13.32.

Meanwhile, PM's PEG ratio is currently 1.92. 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. The Tobacco industry currently had an average PEG ratio of 1.81 as of yesterday's close.

The Tobacco industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 104, which puts it in the top 41% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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