Back to top

Analyst Blog

Philip Morris International Inc. (PM - Analyst Report) is set to report 2Q13 results on Jul 18, 2013, before the opening bell. Last quarter it posted a 4.4% negative surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

We are primarily concerned about Philip Morris’ declining shipment volume as the tobacco industry is facing pressure due to stricter anti-smoking campaigns, higher excise tax and gasoline prices. Governments across the world are imposing higher taxes, forcing companies to increase prices. These tax increases are forcing the company to raise prices of both their premium as well as low priced products.

In the backdrop of a sluggish economy, repeated price increases negatively affected volume as well as margins of the company.

Meanwhile, we are encouraged by PM’s takeover of 100% stake in its Mexican tobacco business in Jun 2013, is also expected to boost international sales.

Earnings Whispers?

Our proven model does not conclusively show that Philip Morris is likely to beat earnings this quarter.

Negative Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method) of Philip Morris, which represents the difference between the Most Accurate estimate ($1.39) and the Zacks Consensus Estimate ($1.41), is -1.42%. This is a meaningful and leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): Philip Morris’ Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

  • Reynolds American Inc. (RAI - Analyst Report), Earnings ESP of +2.41% and a Zacks Rank #1 (Strong Buy)
  • Sanderson Farms Inc. (SAFM - Snapshot Report), Earnings ESP of +17.11% and a Zacks Rank #1 (Strong Buy)
  • Tyson Foods Inc. (TSN - Analyst Report), Earnings ESP of +13.79% and a Zacks Rank #2 (Buy)

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%