Global tobacco manufacturer Phillip Morris International, Inc. ( PM - Analyst Report ) is slated to release its second quarter 2012 results before the opening bell on July 19, 2012. The Zacks Consensus Estimate for the second quarter earnings is pegged at $1.34 a share on revenues of $8,103.0 million.

The Zacks Consensus Estimate for 2012 is $5.17 on revenues of $31,716.0 million.

First Quarter of Fiscal 2012 Recap

Philip Morris reported adjusted first quarter 2012 earnings per share, excluding special items, of $1.27, increasing 19.8% from the year-ago quarter (excluding currency). Reported earnings also outpaced the Zacks Consensus Estimate of $1.19.

During the quarter, Philip Morris’ net revenue grew 9.7% year over year to $7.4 billion, including a favorable currency impact of $92 million. It surpassed the Zacks Consensus Estimate of $7.2 billion. Excluding currency translation, net revenue increased roughly 11.0%, mainly driven by $369 million of favorable pricing and $370 million of favorable volume/mix.

For further details please read: Philip Morris Beats Estimates

Agreement of Estimate Revisions

Over the past 30 days, one of 11 estimates were revised upward while 7 estimates were revised downwards, lowering the second quarter projection by a penny.

For 2012, over the past 30 days, two of 13 estimates were revised upward while nine estimates were revised downwards, lowering the full year 2012 projection by 6 cents.

The downward revision in estimates is not surprising as the company has lowered its earnings guidance for the full year 2012 to $5.10 - $5.20 per diluted share from its prior guidance of $5.20 - $5.30 as it forecasts currency headwinds in the coming quarters.

Moreover, during the Investor Day conference call, the company said that it expects shipment volumes in the second quarter to decline between 8.5% and 9% from the prior-year quarter, largely due to a contraction of total industry volumes in the Southern European countries.

Surprise History

Philip Morris has surpassed the Zacks earnings estimates in all of the last four quarters. The earnings surprise range from 1.85% to 11.38%, with the average earnings surprise being 7.25%.

Our Recommendation

We believe that the cigarette manufacturer and its peers in the tobacco industry like Reynolds American Inc. ( RAI - Analyst Report ) and Altria Group Inc. ( MO - Analyst Report ) are facing tough times due to tax hikes, health concerns, social stigma and laws relating to plain packaging and bans on promotional activities.

However, management continues to enhance shareholder value through share repurchases and dividends. Very recently, the company announced a new share repurchase program of $18.0 billion that is slated to start soon after the completion of the ongoing $12 billion share buyback program, which commenced in May 2010. Moreover, Philip Morris is strengthening its brand portfolio through innovations that are based on enhanced consumer understanding.

Currently, we have a Neutral recommendation on the stock. Further, Philip Morris holds the Zacks #4 Rank, which translates into a short-term Sell rating.