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Philip Morris (PM) Queued for Q4 Earnings: Key Things to Note

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Philip Morris International Inc. (PM - Free Report) is likely to witness a year-over-year rise in the top and the bottom line when it reports fourth-quarter 2021 earnings on Feb 10. The Zacks Consensus Estimate for revenues is pegged at $7,720 million, suggesting a rise of 3.9% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for earnings has risen by a penny over the past seven days to $1.30 per share, indicating an increase of 3.2% from the figure reported in the prior-year period. The tobacco products giant has a trailing four-quarter earnings surprise of 4.8%, on average. Philip Morris delivered earnings surprise of 2.6% in the last reported quarter.

Key Factors to Consider

Philip Morris has been benefiting from its strong pricing power, which has been aiding its adjusted operating income. Though higher pricing might lead to possible decline in cigarette consumption, it is seen that smokers tend to absorb price increases owing to the addictive quality of cigarettes. Higher pricing at the combustible tobacco portfolio has been aiding the company’s performance for a while, which also bodes well for the quarter under review.

Apart from this, the company is progressing well with its business transformation, with smoke-free products generating nearly 30% of the company’s adjusted net revenues on a year-to-date basis as stated on the third-quarter earnings call. The Zacks Consensus Estimate for fourth-quarter total reduced risk products revenues currently stands at $2,394 million, compared with $1,937 million reported in the year-ago period.

That said, the company’s duty-free business has been battling challenges due to the pandemic-led reduced travel. On its third-quarter 2021 earnings call, management highlighted that it only expects limited recovery in duty-free sales in the fourth quarter, after seeing modest enhancement in the third quarter as intercontinental and Asian travel remain subdued. The company expects pandemic-related hurdles in certain markets to linger in the fourth quarter, especially in South & Southeast Asia. Also, it anticipates tough comparisons in Germany and Australia.

Also, on its third-quarter 2021 earnings call, Philip Morris stated that the global semiconductor tightness is causing a shortage in the supply of IQOS devices, which is hampering the assortment and availability of these devices in several markets. These factors, as well as low cigarette volumes raise concerns for the to-be reported quarter. The Zacks Consensus Estimate for fourth-quarter total combustible products revenues is pegged at $5,315 million, compared with $5,507 million reported in the year-ago period.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Philip Morris this time. 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, which is not the case here.

Philip Morris currently has a Zacks Rank #3 (Hold) and an Earnings ESP of -0.12%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Companies Likely to Post a Beat

Grocery Outlet Holding (GO - Free Report) has an Earnings ESP of +8.45% and a Zacks Rank #3. Grocery Outlet is anticipated to register top-and bottom-line decline when it reports fourth-quarter 2021 results. The Zacks Consensus Estimate for GO’s quarterly revenues is pegged at $774 million, indicating a decrease of nearly 4% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Grocery Outlet’s bottom line has remained unchanged in the past 30 days at 20 cents per share. However, the consensus estimate for earnings suggests a decline of 16.7% from the year-ago quarter’s reported figure. Grocery Outlet delivered an earnings beat of 4.5%, on average, in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Service Corporation International (SCI - Free Report) has an Earnings ESP of +17.39% and a Zacks Rank #3. Service Corporation is anticipated to register growth in the top line but a decline in the bottom line when it reports fourth-quarter 2021 results. The Zacks Consensus Estimate for quarterly revenues is pegged at about $1 billion, indicating a rise of 4.3% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Service Corporation’s bottom line has jumped 11.1% in the past 30 days to $1.00 per share. The consensus estimate suggests a drop of 11.5% from the year-ago quarter’s reported figure. SCI has delivered an earnings beat of 45.6%, on average, in the trailing four quarters.

Target (TGT - Free Report) has an Earnings ESP of +0.50% and a Zacks Rank #3. Target is anticipated to register a top-line increase when it reports fourth-quarter fiscal 2021 results. The Zacks Consensus Estimate for TGT’s quarterly revenues is pegged at $31.5 billion, indicating growth of 11.3% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Target’s bottom line has been stable in the past seven days at $2.85 per share, which suggests a rise of 6.7% from the year-ago quarter’s reported figure. It delivered an earnings beat of 19.7%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.