A month has gone by since the last earnings report for Philip Morris (PM Quick QuotePM - Free Report) . Shares have added about 4.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Philip Morris 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 Q2 Earnings Beat Estimates, Revenues Up Y/Y

Philip Morris reported second-quarter 2021 results. Adjusted earnings per share came in at $1.57, which beat the Zacks Consensus Estimate of $1.54. Further, the bottom line rallied 21.7% year over year. On an organic basis, the bottom line increased 17.8%.

Net revenues of $7,594 million increased 14.2% from the figure reported in the year-ago quarter. The top line missed the Zacks Consensus Estimate of $7,840 million. Net revenues, on an organic basis, improved 7.9%. The upside can be attributed to favorable pricing variance, volume/mix and higher cigarette volumes. The upsides were partly offset by unfavorable impacts stemming from the Saudi Arabia customs assessments worth $246 million.

During the second quarter, revenues from combustible products were up 5.4% to $5,318 million on growth across most regions, except the Middle East & Africa and East Asia & Australia. Revenues in RRPs increased 41.7% to $2,276 million.

Total cigarette and heated tobacco unit shipment volumes increased 6.1% to 180.5 billion units. Cigarette shipment volumes went up 3.2% to 156.1 billion units in the quarter, while heated tobacco unit shipment volumes of 24.4 billion units rose 30.2% year over year.

Adjusted operating income came in at $3,454 million, up 23.3% year on year. The metric rose 18.7% on an organic basis. Moreover, adjusted operating income margin of 44.1% expanded 2.7 percentage points on an organic basis.

Region-Wise Performance

Net revenues in the European Union increased 27.2% to $3,149 million. Revenues climbed 15.6% on an organic basis, courtesy of favorable pricing variance and improved volume/mix driven by higher heated tobacco volumes. Total shipment volumes increased 8.7% to 48,425 million units.

In Eastern Europe, net revenues inched up 14.3% to $895 million. Revenues increased 12.5% on an organic basis, courtesy of favorable volume/mix and pricing variance. Total shipment volumes rose 2.9% to 29,625 million units.

In the Middle East & Africa region, net revenues declined 20.5% to $560 million. The metric fell 18.2% on an organic basis due to adverse impacts of Saudi Arabia customs assessments. Total shipment volumes in the region rose 12.7% to 30,859 million units.

Revenues in South & Southeast Asia increased 17.7% to $1,046 million. Revenues in the region were up 10% on an organic basis. The upside was a result of favorable volume/mix partly and pricing variance. Shipment volumes expanded 6% to 35,360 million units.

Revenues from East Asia & Australia advanced 5.7% to $1,514 million. Moreover revenues in the region advanced 3.1% organically due to favorable pricing variance. Total shipment volumes fell 1.3% to 20,872 million units.

Finally, revenues from Latin America & Canada increased 16.8% to $430 million. The metric was up 9% on an organic basis due to favorable volume/mix and pricing. Moreover, total shipment volumes rose 3.2% to 15,353 million units.

Other Financials

The company ended the second quarter with cash and cash equivalents of $4,915 million. Also, it had long-term debt of $27,414 million and shareholders’ deficit of $9,200 million.

The company approved a new share repurchase program of up to $7 billion. Per the program, the company targets to spend $5-7 billion over a three-year period, commencing from third-quarter 2021. The company also declared regular quarterly dividend of $1.20 per share, representing an annualized rate of $4.80.

Guidance

The company revised its view for 2021 and envisions adjusted earnings per share (EPS) in the range of $5.97-$6.07 compared with the earlier view of $5.95-$6.05. At constant currency, adjusted EPS are expected to grow 12-14% to $5.79-$5.89 compared with growth of 11-13% anticipated earlier. The guidance takes into consideration favorable impacts from currency exchange rates worth 18 cents per share.

In 2021, management expects gradual improvement in the general operating landscape. The company does not expect a near-term recovery in the duty-free business due to travel-related uncertainties. In fact, management expects the existing dynamics to persist through the end of 2021. Additionally, total cigarette and heated tobacco unit shipment volume growth is likely to be between flat to an increase of 2% in 2021. Heated tobacco shipment volumes are envisioned in a band of 95-100 billion units in 2021. For 2021, Phillip Morris expects adjusted net revenues to increase nearly 6-7% on an organic basis, compared with growth of 5-7% anticipated earlier. Adjusted operating margin on an organic basis is likely to rally 200 basis points in 2021. For third-quarter 2021, the company expects earnings in the bracket of $1.50-$1.55, including favorable currency impact of nearly 4 cents per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Philip Morris has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Philip Morris has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.