Global tobacco manufacturer
Phillip Morris International, Inc.
(
PM
) 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
) and
Altria Group Inc.
(
MO
) 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.
ALTRIA GROUP (MO): Free Stock Analysis Report
PHILIP MORRIS (PM): Free Stock Analysis Report
REYNOLDS AMER (RAI): Free Stock Analysis Report
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