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Philip Morris' Q3 Earnings Beat Puts ETFs in Focus
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Philip Morris International Inc. (PM - Free Report) posted robust third-quarter 2023 results on Oct 19, wherein the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. The company continued to benefit from strong pricing, along with strength in IQOS and ZYN.
In accordance with its plan to keep tobacco use across the bloc to a minimum by 2040, the EU is set to implement a ban on flavored heated tobacco, which could be a possible headwind for the company in addition to stern tobacco regulations in some markets, as per Reuters. Shares of PM have fallen about 2.66% since its earnings release (as of Oct 19).
Q3 Performance in Detail
The tobacco company reported adjusted earnings per share (EPS) of $1.67, which jumped 20.3% driven by an organic increase in adjusted operating income and robust results from the Swedish Match business. Markedly, the bottom line beat the Zacks Consensus Estimate of $1.61.
Net revenues of $9.14 billion saw an increase of 9.3% on an organic basis. The Zacks Consensus Estimate for the top line was pegged at $9.21 billion.
Total cigarette and HTU shipment volumes increased by 2.2% to 193.6 billion units in the quarter, beating the Zacks estimate of 191.1 billion units. Cigarette shipment volumes dropped 0.5% to 161.1 billion units in the quarter, while HTU shipment volumes of 32.5 billion units rose 18% year over year.
Guidance
For 2023, PM expects adjusted EPS in the band of $6.05-$6.08 compared with $5.98 reported in 2022. Excluding currency movements, adjusted EPS is envisioned in the band of $6.58-$6.61, suggesting 10-10.5% growth from the year-ago period figure. On a reported basis, management expects EPS in the range of $4.95-$4.98 compared with $5.81 reported in 2022.
For 2023, PM expects net revenues to increase nearly 8% on an organic basis compared with roughly 7.5-8.5% projected earlier. The adjusted operating margin on an organic basis is now likely to decline toward the upper end of the 50-150 basis point range.
However, the total international industry volume for cigarettes and HTUs is estimated to decline in the range of 1.5-2% now (excluding China and the United States) compared with a decline of 0.5-1.5% expected earlier.
ETF Impact
Here, we have highlighted some ETFs with significant exposure to Philip Morris.
iShares U.S. Consumer Staples ETF seeks to track the performance of the Russell 1000 Consumer Staples RIC 22.5/45 Capped Index with a basket of 55 securities. The fund has amassed an asset base of $1.36 billion and charges an annual fee of 0.40%.
iShares U.S. Consumer Staples ETF has an exposure of 7.06% in PM.
Cambria Cannabis ETF employs an active strategy and has a basket of 35 securities. The fund has gathered an asset base of $9.79 million and charges an annual fee of 0.42%.
Cambria Cannabis ETF has an exposure of 7.07% in PM.
FirstTrust Morningstar Dividend Leaders Index Fund (FDL - Free Report)
First Trust Morningstar Dividend Leaders Index Fund seeks to track the performance of the Morningstar Dividend Leaders Index with a basket of 100 securities. The fund has gathered an asset base of $4.05 billion and charges an annual fee of 0.45%.
First Trust Morningstar Dividend Leaders Index Fund has an exposure of 6.34% in PM.
Invesco S&P Ultra Dividend Revenue ETF seeks to track the performance of the S&P 900 Dividend Revenue-Weighted Index with a basket of 58 securities. The fund has gathered an asset base of $678.73 million and charges an annual fee of 0.39%.
Invesco S&P Ultra Dividend Revenue ETF has an exposure of 5.47% in PM.
VanEck Durable High Dividend ETF seeks to track the performance of the Morningstar US Dividend Valuation Index with a basket of 74 securities. The fund has amassed an asset base of $73.11 million and charges an annual fee of 0.29%.
VanEck Durable High Dividend ETF has an exposure of 5.02% in PM.
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Philip Morris' Q3 Earnings Beat Puts ETFs in Focus
Philip Morris International Inc. (PM - Free Report) posted robust third-quarter 2023 results on Oct 19, wherein the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. The company continued to benefit from strong pricing, along with strength in IQOS and ZYN.
In accordance with its plan to keep tobacco use across the bloc to a minimum by 2040, the EU is set to implement a ban on flavored heated tobacco, which could be a possible headwind for the company in addition to stern tobacco regulations in some markets, as per Reuters. Shares of PM have fallen about 2.66% since its earnings release (as of Oct 19).
Q3 Performance in Detail
The tobacco company reported adjusted earnings per share (EPS) of $1.67, which jumped 20.3% driven by an organic increase in adjusted operating income and robust results from the Swedish Match business. Markedly, the bottom line beat the Zacks Consensus Estimate of $1.61.
Net revenues of $9.14 billion saw an increase of 9.3% on an organic basis. The Zacks Consensus Estimate for the top line was pegged at $9.21 billion.
Total cigarette and HTU shipment volumes increased by 2.2% to 193.6 billion units in the quarter, beating the Zacks estimate of 191.1 billion units. Cigarette shipment volumes dropped 0.5% to 161.1 billion units in the quarter, while HTU shipment volumes of 32.5 billion units rose 18% year over year.
Guidance
For 2023, PM expects adjusted EPS in the band of $6.05-$6.08 compared with $5.98 reported in 2022. Excluding currency movements, adjusted EPS is envisioned in the band of $6.58-$6.61, suggesting 10-10.5% growth from the year-ago period figure. On a reported basis, management expects EPS in the range of $4.95-$4.98 compared with $5.81 reported in 2022.
For 2023, PM expects net revenues to increase nearly 8% on an organic basis compared with roughly 7.5-8.5% projected earlier. The adjusted operating margin on an organic basis is now likely to decline toward the upper end of the 50-150 basis point range.
However, the total international industry volume for cigarettes and HTUs is estimated to decline in the range of 1.5-2% now (excluding China and the United States) compared with a decline of 0.5-1.5% expected earlier.
ETF Impact
Here, we have highlighted some ETFs with significant exposure to Philip Morris.
iShares U.S. Consumer Staples ETF (IYK - Free Report)
iShares U.S. Consumer Staples ETF seeks to track the performance of the Russell 1000 Consumer Staples RIC 22.5/45 Capped Index with a basket of 55 securities. The fund has amassed an asset base of $1.36 billion and charges an annual fee of 0.40%.
iShares U.S. Consumer Staples ETF has an exposure of 7.06% in PM.
Cambria Cannabis ETF (TOKE - Free Report)
Cambria Cannabis ETF employs an active strategy and has a basket of 35 securities. The fund has gathered an asset base of $9.79 million and charges an annual fee of 0.42%.
Cambria Cannabis ETF has an exposure of 7.07% in PM.
First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report)
First Trust Morningstar Dividend Leaders Index Fund seeks to track the performance of the Morningstar Dividend Leaders Index with a basket of 100 securities. The fund has gathered an asset base of $4.05 billion and charges an annual fee of 0.45%.
First Trust Morningstar Dividend Leaders Index Fund has an exposure of 6.34% in PM.
Invesco S&P Ultra Dividend Revenue ETF (RDIV - Free Report)
Invesco S&P Ultra Dividend Revenue ETF seeks to track the performance of the S&P 900 Dividend Revenue-Weighted Index with a basket of 58 securities. The fund has gathered an asset base of $678.73 million and charges an annual fee of 0.39%.
Invesco S&P Ultra Dividend Revenue ETF has an exposure of 5.47% in PM.
VanEck Durable High Dividend ETF (DURA - Free Report)
VanEck Durable High Dividend ETF seeks to track the performance of the Morningstar US Dividend Valuation Index with a basket of 74 securities. The fund has amassed an asset base of $73.11 million and charges an annual fee of 0.29%.
VanEck Durable High Dividend ETF has an exposure of 5.02% in PM.