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Philip Morris Q1 Results Disappoint: ETFs in Focus

Zacks Equity Research

Shares of Philip Morris International Inc. PM dropped 3.45% at market close on Thursday, April 21, 2017. The company reported a 13.01% decrease in revenues quarter-over-quarter. Revenues came in at $6.064 billion in the first quarter of 2017compared with $6.971 billion in the fourth quarter of 2016 and $6.083 billion in the year-ago quarter. It failed to beat the Zacks Consensus Estimate on both earnings and sales in the first quarter of 2017 (read: Philip Morris Misses Q1 Earnings and Sales; Stock Down April 20, 2017)

 

Q1 Performance

 

Philip Morris reported non-GAAP earnings per share of $0.98, falling short of the Zacks Consensus Estimate of $1.03. Revenues also missed the consensus mark of $6.427 billion. The tobacco company reported operating incomeof$2.4 billion, down 3.1% year-over-year.

 

Shipment Volume

 

The company’s total shipment volume was 177.987 billion units, down 9.41% from196.494 billion units in first-quarter 2016. The decline was due to a sharp fall of 11.47% in shipment of cigarettes to 173.552 from 196.041 billion units in the year-ago quarter. However, heated tobacco unit shipments were up to 4.435 billion units from 453 million units in first quarter of 2016. 

 

Outlook

 

Philip Morris expects its full-year 2017 earnings per share to be in the range of $4.84-$4.99compared with$4.48 in 2016. This forecast represents 9%-12% growth over the 2016 figure, excluding the impact of adverse currency movement of $0.08 for the full year and a tax item in the first quarter of $0.04.

 

In the current scenario, let’s have a look at the following ETFs that have a relatively high exposure to Philip Morris.

 

Consumer Staples Select Sector SPDR Fund XLP

 

This fund offers exposure to the Consumer Staples sector of the U.S. It has AUM of $9.09 billion and charges a fee of 14 basis points a year. It has 9.25% exposure to Philip Morris (as of March 31, 2017). The fund returned 6.16% in the past one year and 6.67% in the year-to-date timeframe (as of April 20, 2017). The fund was down 0.2% at market close on April 20, 2017. XLP currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Can Strong PG Earnings Do Any Good to Soft Staples ETFs?).

 

Fidelity MSCI Consumer Staples Index ETF FSTA

 

This fund offers exposure to the Consumer Staples sector of the U.S. at a very cheap expense ratio. It has AUM of $292.4 million and charges a fee of 8 basis points a year. It has an 8.49% exposure to Philip Morris (as of April 19, 2017). The fund returned 6.86% in the past one year and 6.31% in the year-to-date timeframe (as of April 20, 2017). The fund was down 0.18% at market close on April 20, 2017. STA currently has a Zacks ETF Rank #3 with a Medium risk outlook.

 

Vanguard Consumer Staples ETF VDC

 

This fund is one of the most popular funds in the Consumer Staples sector of the U.S. It has AUM of $3.6 billion and charges a fee of 12 basis points a year. It has 7.9% exposure to Philip Morris (as of March 31, 2017). The fund returned 6.95% in the past one year and 5.95% in the year-to-date timeframe (as of April 20, 2017). The fund was down 0.11% at market close on April 20, 2017. VDC currently has a Zacks ETF Rank #3 with a Medium risk outlook.

 

Given below is a chart for comparing the year-to-date performance of the funds and Philip Morris.

 

Source: Yahoo Finance

 

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Shares of Philip Morris International Inc. (PM) dropped 3.45% at market close on Thursday, April 21, 2017. The company reported a 13.01% decrease in revenues quarter-over-quarter. Revenues came in at $6.064 billion in the first quarter of 2017compared with $6.971 billion in the fourth quarter of 2016 and $6.083 billion in the year-ago quarter. It failed to beat the Zacks Consensus Estimate on both earnings and sales in the first quarter of 2017 (read: Philip Morris Misses Q1 Earnings and Sales; Stock Down April 20, 2017)

Q1 Performance

Philip Morris reported non-GAAP earnings per share of $0.98, falling short of the Zacks Consensus Estimate of $1.03. Revenues also missed the consensus mark of $6.427 billion. The tobacco company reported operating incomeof$2.4 billion, down 3.1% year-over-year.

Shipment Volume

The company’s total shipment volume was 177.987 billion units, down 9.41% from196.494 billion units in first-quarter 2016. The decline was due to a sharp fall of 11.47% in shipment of cigarettes to 173.552 from 196.041 billion units in the year-ago quarter. However, heated tobacco unit shipments were up to 4.435 billion units from 453 million units in first quarter of 2016. 

Outlook

Philip Morris expects its full-year 2017 earnings per share to be in the range of $4.84-$4.99compared with$4.48 in 2016. This forecast represents 9%-12% growth over the 2016 figure, excluding the impact of adverse currency movement of $0.08 for the full year and a tax item in the first quarter of $0.04.

In the current scenario, let’s have a look at the following ETFs that have a relatively high exposure to Philip Morris.

Consumer Staples Select Sector SPDR Fund (XLP)

This fund offers exposure to the Consumer Staples sector of the U.S. It has AUM of $9.09 billion and charges a fee of 14 basis points a year. It has 9.25% exposure to Philip Morris (as of March 31, 2017). The fund returned 6.16% in the past one year and 6.67% in the year-to-date timeframe (as of April 20, 2017). The fund was down 0.2% at market close on April 20, 2017. XLP currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Can Strong PG Earnings Do Any Good to Soft Staples ETFs?).

Fidelity MSCI Consumer Staples Index ETF (FSTA)

This fund offers exposure to the Consumer Staples sector of the U.S. at a very cheap expense ratio. It has AUM of $292.4 million and charges a fee of 8 basis points a year. It has an 8.49% exposure to Philip Morris (as of April 19, 2017). The fund returned 6.86% in the past one year and 6.31% in the year-to-date timeframe (as of April 20, 2017). The fund was down 0.18% at market close on April 20, 2017. STA currently has a Zacks ETF Rank #3 with a Medium risk outlook.

Vanguard Consumer Staples ETF (VDC)

This fund is one of the most popular funds in the Consumer Staples sector of the U.S. It has AUM of $3.6 billion and charges a fee of 12 basis points a year. It has 7.9% exposure to Philip Morris (as of March 31, 2017). The fund returned 6.95% in the past one year and 5.95% in the year-to-date timeframe (as of April 20, 2017). The fund was down 0.11% at market close on April 20, 2017. VDC currently has a Zacks ETF Rank #3 with a Medium risk outlook.

Given below is a chart for comparing the year-to-date performance of the funds and Philip Morris.

 

Source: Yahoo Finance

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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

 

 

 


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SPDR-CONS STPL (XLP): ETF Research Reports
 
VIPERS-CONS STA (VDC): ETF Research Reports
 
FID-STAPLES (FSTA): ETF Research Reports
 
Philip Morris International Inc (PM): Free Stock Analysis Report
 
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