Philip Morris International Inc.

Philip Morris International Inc. (PM - Analyst Report) continues to deliver impressive results. The company recently reported its 5th consecutive positive earnings surprise driven by strong sales growth in the Asia and Europe, Middle East & Africa regions.

Analysts have been raising their estimates off the strong quarter, sending the stock to a Zacks #2 Rank (Buy). In addition to strong earnings growth, the company pays a dividend that yields a solid 3.8%.

Company Description

Philip Morris International is a global tobacco company with seven of the world's top 15 international brands. Its flagship brand, Marlboro, is the number one cigarette brand in the world.

Philip Morris International was spun-off from Altria in March 2008. It is headquartered in New York, New York and has a market cap of $143 billion.

Fourth Quarter Results

The company reported better than expected fourth quarter results on February 9. Earnings per share came in at $1.10, beating the Zacks Consensus Estimate by 2 cents. It was a 13% increase over the same quarter in 2010.

Net revenue rose 9% to $7.671 billion, ahead of the Zacks Consensus Estimate of $7.461 billion. This was driven in part by a 21% increase in Asia and a 9% increase in Europe, Middle East & Africa. Overall cigarette shipment volume was up 0.7%.

Adjusted operating income was up 8% year-over-year.

Estimates Rising

As you can see in the Price & Consensus chart below, estimates have been rising for both 2012 and 2013 recently:

Management stated that it expects to earn between $5.25 and $5.35 per share in 2012. The Zacks Consensus Estimate for 2012 is within guidance at $5.32, representing 9% growth over 2011 EPS. The 2013 consensus estimate is $5.88, corresponding with 11% growth.

Cash Machine

Philip Morris continues to generate enormous amounts of free cash flow, which it is using to return value to shareholders through stock buybacks and dividend hikes. In the fourth quarter alone, the company bought back 14.5 million shares for $1 billion.

It also pays a dividend that currently yields a stellar 3.8%.

Valuation

Shares of PM are up almost 15% since I last wrote about Philip Morris back on November 25.. But the valuation picture still looks reasonable.

The stock trades at 15x forward earnings, in-line with the industry median. And its price to sales ratio of 1.9 is below the peer group multiple of 2.4.

The Bottom Line

With strong earnings momentum, solid growth projections, shareholder-friendly management and reasonable valuation, Philip Morris International still offers attractive total return potential.

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CA Inc. (CA - Analyst Report) recently delivered a triple play for the third quarter of its fiscal 2012: a positive earnings surprise, a positive sales surprise, and increased guidance from management. This prompted analysts to revise their estimates significantly higher for both 2012 and 2013, sending the stock to a Zacks #1 Rank (Strong Buy). In addition, the company announced a capital allocation plan that targets to return up to $2.5 billion to shareholders through fiscal 2014. It currently pays a dividend that yields 3.7%. Read the full article.

Cabot Corporation (CBT - Snapshot Report) recently delivered its 5th consecutive positive earnings surprise as earnings per share grew 15% year-over-year. And management provided a positive outlook for 2012, prompting analysts to revise their estimates higher. It is a Zacks #2 Rank (Buy) stock. The company also pays a dividend that yields a solid 1.8%. Read the full article.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor.

Read the full analyst report on PM