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How Has Philip Morris' Q1 Earnings Beat Impacted Staples ETFs?
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Philip Morris International Inc. (PM - Free Report) reported first-quarter 2020 results on Apr 21, before market open. Earnings and revenues topped estimates and grew year over year. However, since the earnings release, Philip Morris’ shares have lost about 6% largely due to management’s revising of guidance to reflect the impact of coronavirus.
Q1 Performance in Detail
Philip Morris reported adjusted earnings per share (EPS) of $1.21, beating the Zacks Consensus Estimate of $1.13. The bottom line rose 11% year over year. After excluding currency, the bottom line increased 30.1%, on a like-for-like (LFL) basis.
Net revenues of $7.15 billion surpassed the Zacks Consensus Estimate of $6.74 billion. Moreover, the top line rose 6% year over year. Furthermore, the metric increased 10% at constant currency (cc) and on a LFL basis on favorable pricing across most regions and improved volume/mix.
Adjusted operating income went up 11.4% year over year to $2.79 billion.
Shipment Volume
The company’s total cigarette and heated tobacco unit shipment volume fell 1.2% to 173.7 billion units. While cigarette shipment volume declined 4% to around 157 billion units in the first quarter, heated tobacco unit shipment volume of almost 16.7 billion units reflected a year-over-year rise of 45.5%.
Shipment volumes in the Eastern Europe rose 17.9% year over year, European Union grew 8.4% along with a 2.4% rise in East Asia & Australia. Meanwhile, there was a decline in shipment volumes in the, Middle East & Africa, South & Southeast Asia and Latin America & Canada regions.
Coronavirus Impacts Guidance
Philip Morris has withdrawn its bottom-line guidance for 2020 that was announced with the fourth-quarter 2019 results on Feb 6. Management has provided with the guidance for the second-quarter 2020 which is expected to face the maximum damage from 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.
ETF Impact
Some consumer staples ETFs with significant exposure to Philip Morris seem to have lost since its earnings release.
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 $594.6 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 23.8%, 23.6% and 22.1% allocation, respectively. It has a 6.2% exposure to Philip Morris.
This ETF tracks the Dow Jones U.S. Consumer Goods Index, giving investors exposure to the Consumer Staples space. It has AUM of $468.8 million and charges a fee of 42 basis points a year. From a sector-look, Food Beverage Tobacco, Household & Personal Products and Consumer Durables have the highest exposure to the fund, with 45.8%, 23.7% and 13.1% allocation, respectively. It has an exposure of 5.7% to Philip Morris.
However, the fund has a Zacks ETF Rank #3, with a Medium risk outlook. Since the earnings release, the fund has lost about 2.9% (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 $5.22 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 24.1%, 20.8% and 17.3% allocation, respectively. It has a 4.5% exposure to Philip Morris.
Image: Bigstock
How Has Philip Morris' Q1 Earnings Beat Impacted Staples ETFs?
Philip Morris International Inc. (PM - Free Report) reported first-quarter 2020 results on Apr 21, before market open. Earnings and revenues topped estimates and grew year over year. However, since the earnings release, Philip Morris’ shares have lost about 6% largely due to management’s revising of guidance to reflect the impact of coronavirus.
Q1 Performance in Detail
Philip Morris reported adjusted earnings per share (EPS) of $1.21, beating the Zacks Consensus Estimate of $1.13. The bottom line rose 11% year over year. After excluding currency, the bottom line increased 30.1%, on a like-for-like (LFL) basis.
Net revenues of $7.15 billion surpassed the Zacks Consensus Estimate of $6.74 billion. Moreover, the top line rose 6% year over year. Furthermore, the metric increased 10% at constant currency (cc) and on a LFL basis on favorable pricing across most regions and improved volume/mix.
Adjusted operating income went up 11.4% year over year to $2.79 billion.
Shipment Volume
The company’s total cigarette and heated tobacco unit shipment volume fell 1.2% to 173.7 billion units. While cigarette shipment volume declined 4% to around 157 billion units in the first quarter, heated tobacco unit shipment volume of almost 16.7 billion units reflected a year-over-year rise of 45.5%.
Shipment volumes in the Eastern Europe rose 17.9% year over year, European Union grew 8.4% along with a 2.4% rise in East Asia & Australia. Meanwhile, there was a decline in shipment volumes in the, Middle East & Africa, South & Southeast Asia and Latin America & Canada regions.
Coronavirus Impacts Guidance
Philip Morris has withdrawn its bottom-line guidance for 2020 that was announced with the fourth-quarter 2019 results on Feb 6. Management has provided with the guidance for the second-quarter 2020 which is expected to face the maximum damage from 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.
ETF Impact
Some consumer staples ETFs with significant exposure to Philip Morris seem to have lost since its earnings release.
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 $594.6 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 23.8%, 23.6% and 22.1% allocation, respectively. It has a 6.2% exposure to Philip Morris.
Since the earnings release, the fund has lost about 2.1%. FSTA has a Zacks ETF Rank #3 (Hold), with a Medium risk outlook (read: What Will Soft Drink Earnings Hold for These ETFs?).
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 Staples space. It has AUM of $468.8 million and charges a fee of 42 basis points a year. From a sector-look, Food Beverage Tobacco, Household & Personal Products and Consumer Durables have the highest exposure to the fund, with 45.8%, 23.7% and 13.1% allocation, respectively. It has an exposure of 5.7% to Philip Morris.
However, the fund has a Zacks ETF Rank #3, with a Medium risk outlook. Since the earnings release, the fund has lost about 2.9% (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 $5.22 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 24.1%, 20.8% and 17.3% allocation, respectively. It has a 4.5% exposure to Philip Morris.
Since Philip Morris’ earnings release, the fund has lost about 2%. VDC has a Zacks ETF Rank #3, with a Medium risk outlook (read: Staples ETFs to Gain from Upbeat PG Earnings & Dividend Hike).
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