Global tobacco manufacturer
Phillip Morris International, Inc.
) is slated to release its third quarter 2012 results before the
opening bell on October 18, 2012. The Zacks Consensus Estimate for
third quarter earnings is pegged at $1.39 a share (year over year
increase of 1.5%) on revenues of $8.3 billion (year over year
decline of 60%).
Second Quarter Fiscal 2012 Recap
Philip Morris reported adjusted second quarter 2012 earnings per
share of $1.36, surpassing the prior-year quarter earnings by 9.0%,
excluding currency. The reported earnings beat the Zacks Consensus
Estimate of $1.34. Earnings went up owing to the favorable impact
of lower shares outstanding.
During the quarter, Philip Morris' net revenue declined 1.8%
from the prior-year quarter to $8.1 billion, including an
unfavorable currency impact of $402 million. Revenue was in line
with the Zacks Consensus Estimate. Excluding currency translation,
net revenue increased roughly 2.9% from the prior-year quarter,
mainly driven by pricing, which offset volume headwinds.
Agreement of Estimate Revisions
Over the past 30 days, only 1 of the 10 analysts providing
estimates on Philip Morris revised the earnings estimates for the
third quarter of 2012 in the upward direction. None of the analysts
have revised their estimates in the negative direction.
For fiscal 2012, over the past 30 days, 4 of the 13 analysts
providing estimates have changed their estimates in the positive
direction. None of the analysts have revised it in the opposite
The upward revision in estimates is not surprising as the
company has increased its adjusted earnings guidance for full year
2012 by 10%-12%. In addition, the company's new share buyback
program of $18 million (commenced on August 1) will also facilitate
Magnitude of Estimate Revisions
The Zacks Consensus Estimate for the third quarter of fiscal
2012 has remained static over the past 30 days at $1.39 per share.
For fiscal 2012, the earnings estimate has climbed 2 cents from
$5.17 to $5.19 per share over the past 30 days.
Philip Morris has surpassed the Zacks Consensus Estimate in all
of the last four quarters. The earnings surprise ranges from 1.49%
to 11.38%, with the average earnings surprise being 4.9%.
Philip Morris has been returning value to its shareholders
through dividends and buybacks. The company, in addition to share
repurchases, has offered impressive dividend yield and consistent
dividend hike, showing the financial strength of the company to
fund growth and sustain any economic slowdown or a temporary
crisis. Moreover, Philip Morris' strong brand portfolio and its
expansion in Asian markets should further augment the position of
the company and give it an opportunity to grow.
The company's major competitors are
Altria Group Inc.
Reynolds American Inc.
). Currently, we have a long term Neutral recommendation on the
stock. Further, Philip Morris holds a Zacks #2 Rank (short-term Buy
rating) reflecting the upward trend in estimate revisions.
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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