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A month has gone by since the last earnings report for Philip Morris International Inc. PM. Shares have added about 8.1% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is PM due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Philip Morris Q4 Earnings & Sales Miss, Guides 2018
Philip Morris International posted fourth-quarter fiscal 2017 results. Adjusted earnings of $1.31 per share missed the Zacks Consensus Estimate of $1.36. However, adjusted earnings in the reported quarter jumped 19.1% from the year-ago period.
Net revenue, excluding excise taxes, was $8,294 million, which increased 19% (up 18.8% excluding favorable currency of $14 million) in the fourth quarter. However, net revenues lagged the Zacks Consensus Estimate of $8,372 million. Favorable pricing and volume/mix in the quarter drove revenues. While, revenues increased in the European Union (EU), Asia, Latin America & Canada, the same declined in Eastern Europe, the Middle East & Africa (EEMA).
During the quarter, revenues from combustible products inched up 0.3% (down 0.8% excluding negative currency) to $6,651 million. Moreover, Reduced Risk Products (RRPs) reported a whopping increase from last-year quarter, driven by shift of customer preference away from tobacco products. The company generated revenues of $1,643 million from RRPs, significantly higher than $343 million reported last year.
Total cigarette and heated tobacco unit shipment volume rose 3.8% to 212.1 billion units. The figures were unfavorable in the EEMA and in Latin America & Canada mainly due to low cigarette shipment volumes. These were offset by increased volumes in Asia and EU, as well as higher heated tobacco unit shipment volume across all regions. While cigarette shipment volume declined 2.1% in the quarter, heated tobacco unit shipment volume of 15.7 billion units, increased significantly from 3.7 billion units recorded in fourth-quarter 2016.
Adjusted operating companies income was up 25.5% year over year to $ $3,381 million owing to favorable pricing and growth across all regions along with favorable volume/mix in the EU and Asia. Excluding currency impact of $196 million, adjusted operating income increased 18.2%. However, adjusted operating margin was down 220 basis points to 40.8%.
The company provided fiscal 2018 guidance. The company expects earnings per share in the range of $5.20-$5.35, which depicts growth of 34-38% over the earnings of $3.88 in 2017. Excluding a favorable currency impact, the company anticipates adjusted earnings growth of nearly 7-10%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted by -24.5% due to these changes.
Philip Morris International Inc Price and Consensus
Philip Morris International Inc Price and Consensus | Philip Morris International Inc Quote
At this time, PM has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, PM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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