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Factors to Watch as Philip Morris (PM) Readies for Q1 Earnings
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Philip Morris International Inc. (PM - Free Report) is likely to register a top-line increase from the respective year-ago fiscal quarter’s reading when it reports first-quarter 2023 earnings on Apr 20. The Zacks Consensus Estimate for quarterly revenues is pegged at $8,065 million, suggesting a rise of 4.1% from the prior-year fiscal quarter’s reported figure.
The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the past 30 days at $1.33 per share. However, the figure indicates a decline of 14.7% from the figure reported in the prior-year fiscal quarter. This tobacco giant has a trailing four-quarter earnings surprise of 10.9%, on average. PM delivered an earnings surprise of 7.8% in the last reported quarter.
We expect first-quarter revenues to decrease 5.5% year over year to $7,319.2 million and adjusted earnings per share (EPS) to drop 15.4% to $1.32.
Philip Morris International Inc. Price, Consensus and EPS Surprise
Philip Morris has been benefiting from its strong pricing power. Though higher pricing might lead to a possible decline in cigarette consumption, it is seen that smokers tend to absorb price increases due to the addictive quality of cigarettes. Higher pricing variance was an upside to the company’s performance (mainly due to increased combustible tobacco pricing) in the fourth quarter of 2022. The continuation of this trend remains positive.
Philip Morris’ focus on smoke-free products has also been working well. The company is progressing well with its business transformation, with smoke-free products generating 36% of its net revenues in the fourth quarter of 2022. PM is well-placed toward becoming a majority smoke-free company by 2025. To this end, the company’s IQOS, a heat-not-burn device, counts as one of the leading reduced-risk products (RRPs) in the industry.
In the fourth quarter of 2022, revenues from smoke-free products (excluding Wellness and Healthcare) jumped 23% to $2,866 million. Total IQOS users at the end of the fourth quarter were estimated at roughly 24.9 million (including nearly 17.8 million who switched to IQOS and stopped smoking).
For 2023, PM expects net revenues to increase by nearly 7-8.5% on an organic basis, driven by higher combustible pricing and the continued progress of IQOS. This also bodes well for the quarter under review.
However, the company has been battling cost-related headwinds for a while now. In the fourth quarter of 2022, the adjusted operating income margin was somewhat affected by increased manufacturing costs (mainly due to escalated logistics costs and other inflationary impacts).
Management expects certain margin pressures in the first half of 2023. It anticipates the first quarter to be the most difficult, wherein it expects EPS in the band of $1.28-$1.33, including currency headwinds. This indicates heated tobacco unit shipment volumes of about 26-28 billion units, organic top-line growth in the low single digits and lower margins. These raise concerns for the first-quarter bottom line.
What the Zacks Model Unveils
Our proven model predicts 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 the case here.
Philip Morris has a Zacks Rank #3 and an Earnings ESP of +2.76%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the Favorable Combination
Here are three other companies worth considering as our model shows that these also have the right combination of elements to beat earnings this time.
Kimberly-Clark Corporation (KMB - Free Report) currently has an Earnings ESP of +6.71% and a Zacks Rank #2. The company is expected to register a top-and-bottom-line decline when it reports first-quarter 2023 results. The consensus mark for Kimberly-Clark’s revenues is pegged at $5.1 billion, indicating a drop of 0.4% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the quarterly EPS of $1.31 suggests a dip of around 3% from the year-ago quarter. KMB has a trailing four-quarter earnings surprise of 1.4%, on average.
Altria Group (MO - Free Report) currently has an Earnings ESP of +2.74% and a Zacks Rank of 3. The company is likely to register an increase in the top and bottom lines when it reports first-quarter 2023 results. The Zacks Consensus Estimate for Altria’s quarterly revenues is pegged at roughly $5 billion, which suggests a rise of 3.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for MO’s quarterly EPS of $1.19 suggests a 6.3% increase from the year-ago quarter. Altria has a trailing four-quarter earnings surprise of 0.3%, on average.
Sysco Corporation (SYY - Free Report) currently has an Earnings ESP of +0.36% and a Zacks Rank of 3. The company is likely to register a top-and-bottom-line increase when it reports third-quarter fiscal 2023 results. The consensus mark for SYY’s quarterly revenues is pegged at $18.7 million, which suggests a jump of 10.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Sysco’s bottom line has deteriorated by a penny to 92 cents per share in the past 30 days. The consensus estimate indicates a 29.6% improvement from the year-ago quarter’s figure.
Image: Bigstock
Factors to Watch as Philip Morris (PM) Readies for Q1 Earnings
Philip Morris International Inc. (PM - Free Report) is likely to register a top-line increase from the respective year-ago fiscal quarter’s reading when it reports first-quarter 2023 earnings on Apr 20. The Zacks Consensus Estimate for quarterly revenues is pegged at $8,065 million, suggesting a rise of 4.1% from the prior-year fiscal quarter’s reported figure.
The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the past 30 days at $1.33 per share. However, the figure indicates a decline of 14.7% from the figure reported in the prior-year fiscal quarter. This tobacco giant has a trailing four-quarter earnings surprise of 10.9%, on average. PM delivered an earnings surprise of 7.8% in the last reported quarter.
We expect first-quarter revenues to decrease 5.5% year over year to $7,319.2 million and adjusted earnings per share (EPS) to drop 15.4% to $1.32.
Philip Morris International Inc. Price, Consensus and EPS Surprise
Philip Morris International Inc. price-consensus-eps-surprise-chart | Philip Morris International Inc. Quote
Factors at Play
Philip Morris has been benefiting from its strong pricing power. Though higher pricing might lead to a possible decline in cigarette consumption, it is seen that smokers tend to absorb price increases due to the addictive quality of cigarettes. Higher pricing variance was an upside to the company’s performance (mainly due to increased combustible tobacco pricing) in the fourth quarter of 2022. The continuation of this trend remains positive.
Philip Morris’ focus on smoke-free products has also been working well. The company is progressing well with its business transformation, with smoke-free products generating 36% of its net revenues in the fourth quarter of 2022. PM is well-placed toward becoming a majority smoke-free company by 2025. To this end, the company’s IQOS, a heat-not-burn device, counts as one of the leading reduced-risk products (RRPs) in the industry.
In the fourth quarter of 2022, revenues from smoke-free products (excluding Wellness and Healthcare) jumped 23% to $2,866 million. Total IQOS users at the end of the fourth quarter were estimated at roughly 24.9 million (including nearly 17.8 million who switched to IQOS and stopped smoking).
For 2023, PM expects net revenues to increase by nearly 7-8.5% on an organic basis, driven by higher combustible pricing and the continued progress of IQOS. This also bodes well for the quarter under review.
However, the company has been battling cost-related headwinds for a while now. In the fourth quarter of 2022, the adjusted operating income margin was somewhat affected by increased manufacturing costs (mainly due to escalated logistics costs and other inflationary impacts).
Management expects certain margin pressures in the first half of 2023. It anticipates the first quarter to be the most difficult, wherein it expects EPS in the band of $1.28-$1.33, including currency headwinds. This indicates heated tobacco unit shipment volumes of about 26-28 billion units, organic top-line growth in the low single digits and lower margins. These raise concerns for the first-quarter bottom line.
What the Zacks Model Unveils
Our proven model predicts 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 the case here.
Philip Morris has a Zacks Rank #3 and an Earnings ESP of +2.76%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the Favorable Combination
Here are three other companies worth considering as our model shows that these also have the right combination of elements to beat earnings this time.
Kimberly-Clark Corporation (KMB - Free Report) currently has an Earnings ESP of +6.71% and a Zacks Rank #2. The company is expected to register a top-and-bottom-line decline when it reports first-quarter 2023 results. The consensus mark for Kimberly-Clark’s revenues is pegged at $5.1 billion, indicating a drop of 0.4% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the quarterly EPS of $1.31 suggests a dip of around 3% from the year-ago quarter. KMB has a trailing four-quarter earnings surprise of 1.4%, on average.
Altria Group (MO - Free Report) currently has an Earnings ESP of +2.74% and a Zacks Rank of 3. The company is likely to register an increase in the top and bottom lines when it reports first-quarter 2023 results. The Zacks Consensus Estimate for Altria’s quarterly revenues is pegged at roughly $5 billion, which suggests a rise of 3.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for MO’s quarterly EPS of $1.19 suggests a 6.3% increase from the year-ago quarter. Altria has a trailing four-quarter earnings surprise of 0.3%, on average.
Sysco Corporation (SYY - Free Report) currently has an Earnings ESP of +0.36% and a Zacks Rank of 3. The company is likely to register a top-and-bottom-line increase when it reports third-quarter fiscal 2023 results. The consensus mark for SYY’s quarterly revenues is pegged at $18.7 million, which suggests a jump of 10.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Sysco’s bottom line has deteriorated by a penny to 92 cents per share in the past 30 days. The consensus estimate indicates a 29.6% improvement from the year-ago quarter’s figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.