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How Will Philip Morris' Q2 Earnings Impact These Staples ETFs?
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Philip Morris International Inc. (PM - Free Report) will report second-quarter 2020 results on Jul 21. Let’s take a look at this tobacco giant’s fundamentals ahead of earnings results.
Philip Morris delivered an earnings surprise of 7.1% in the last reported quarter and has outperformed the consensus mark by 5.7%, on average, in the trailing four quarters. The Zacks Consensus Estimate for second-quarter earnings has gone up by a penny to $1.09 per share over the past 30 days. However, this suggests a decline of 25.3% from the figure reported in the year-ago period. The consensus mark for revenues stands at $6.46 billion, indicating a decline of 16.1% from the year-ago period’s figure. The stock has a VGM Score of D and belongs to a top-ranked Zacks industry (top 36%).
Philip Morris International Inc. Price and EPS Surprise
Philip Morris had withdrawn its bottom-line guidance for 2020 that was provided with the fourth-quarter 2019 results on Feb 6. Management also announced the guidance for the second-quarter 2020 which is expected to face considerable damage owing to the pandemic. In the second quarter, currency-neutral revenues are expected to decline 8-12% due to coronavirus-led issues, including a drop in IQOS sales. Further, management expects EPS in the second quarter between $1 and $1.10, including impacts from adverse currency movements of around 12 cents per share.
Our Methodology
Our proven model doesn’t conclusively predict an earnings beat for Philip Morris this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Philip Morris currently has a Zacks Rank #3 and an Earnings ESP of -0.16%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
ETFs in Focus
Some consumer staples ETFs with significant exposure to Philip Morris that can be impacted by the earnings release are the following:
Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)
This fund offers exposure to the U.S. Consumer Staples sector at a very low expense ratio. It has AUM of $662.8 million and charges a fee of 8 basis points a year. From an industry-exposure look, Beverages, Household Products and Food & Staples Retailing have the highest exposure to the fund, with 23.7%, 23.6% and 21.8% allocation, respectively. It has a 5.7% exposure to Philip Morris.
This ETF tracks the Dow Jones U.S. Consumer Goods Index, giving investors exposure to the consumer goods space. It has AUM of $552.2 million and charges a fee of 42 basis points a year. From a sector-look, Food Beverage Tobacco, Household & Personal Products and Autos & Components have the highest exposure to the fund, with 41.4%, 22.2% and 14.3% allocation, respectively. It has an exposure of 4.9% to Philip Morris.
However, the fund has a Zacks ETF Rank #4 (Sell), with a Medium-risk outlook. The fund has gained 2.4% year to date (see all Consumer Staples ETFs here).
This fund is one of the most popular in the U.S. Consumer Staples sector. It has AUM of $5.40 billion and charges a fee of 10 basis points a year. From a sector-look, Household products, Soft drinks and Packaged Foods & Meats have the highest exposure to the fund, with 24.7%, 20.4% and 17.2% allocation, respectively. It has a 4.5% exposure to Philip Morris.
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How Will Philip Morris' Q2 Earnings Impact These Staples ETFs?
Philip Morris International Inc. (PM - Free Report) will report second-quarter 2020 results on Jul 21. Let’s take a look at this tobacco giant’s fundamentals ahead of earnings results.
Philip Morris delivered an earnings surprise of 7.1% in the last reported quarter and has outperformed the consensus mark by 5.7%, on average, in the trailing four quarters. The Zacks Consensus Estimate for second-quarter earnings has gone up by a penny to $1.09 per share over the past 30 days. However, this suggests a decline of 25.3% from the figure reported in the year-ago period. The consensus mark for revenues stands at $6.46 billion, indicating a decline of 16.1% from the year-ago period’s figure. The stock has a VGM Score of D and belongs to a top-ranked Zacks industry (top 36%).
Philip Morris International Inc. Price and EPS Surprise
Philip Morris International Inc. price-eps-surprise | Philip Morris International Inc. Quote
Coronavirus to Impact Numbers
Philip Morris had withdrawn its bottom-line guidance for 2020 that was provided with the fourth-quarter 2019 results on Feb 6. Management also announced the guidance for the second-quarter 2020 which is expected to face considerable damage owing to the pandemic. In the second quarter, currency-neutral revenues are expected to decline 8-12% due to coronavirus-led issues, including a drop in IQOS sales. Further, management expects EPS in the second quarter between $1 and $1.10, including impacts from adverse currency movements of around 12 cents per share.
Our Methodology
Our proven model doesn’t conclusively predict an earnings beat for Philip Morris this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Philip Morris currently has a Zacks Rank #3 and an Earnings ESP of -0.16%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
ETFs in Focus
Some consumer staples ETFs with significant exposure to Philip Morris that can be impacted by the earnings release are the following:
Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)
This fund offers exposure to the U.S. Consumer Staples sector at a very low expense ratio. It has AUM of $662.8 million and charges a fee of 8 basis points a year. From an industry-exposure look, Beverages, Household Products and Food & Staples Retailing have the highest exposure to the fund, with 23.7%, 23.6% and 21.8% allocation, respectively. It has a 5.7% exposure to Philip Morris.
FSTA has a Zacks ETF Rank #5 (Strong Sell), with a Medium-risk outlook. The fund has lost 2.8% year to date (read: Walmart Delights Investors: ETFs in Focus).
iShares U.S. Consumer Goods ETF (IYK - Free Report)
This ETF tracks the Dow Jones U.S. Consumer Goods Index, giving investors exposure to the consumer goods space. It has AUM of $552.2 million and charges a fee of 42 basis points a year. From a sector-look, Food Beverage Tobacco, Household & Personal Products and Autos & Components have the highest exposure to the fund, with 41.4%, 22.2% and 14.3% allocation, respectively. It has an exposure of 4.9% to Philip Morris.
However, the fund has a Zacks ETF Rank #4 (Sell), with a Medium-risk outlook. The fund has gained 2.4% year to date (see all Consumer Staples ETFs here).
Vanguard Consumer Staples ETF (VDC - Free Report)
This fund is one of the most popular in the U.S. Consumer Staples sector. It has AUM of $5.40 billion and charges a fee of 10 basis points a year. From a sector-look, Household products, Soft drinks and Packaged Foods & Meats have the highest exposure to the fund, with 24.7%, 20.4% and 17.2% allocation, respectively. It has a 4.5% exposure to Philip Morris.
VDC has a Zacks ETF Rank #5, with a Medium-risk outlook. The fund has lost 2.6% year to date (read: Try These ETF Strategies as the Coronavirus Crisis Worsens).
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