Key Points
Philip Morris International's management projects solid growth despite seeing some headwinds.
The introduction of Zyn Ultra and Iqos in the U.S. could be big growth drivers in the coming years.
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Philip Morris International's (NYSE: PM) stock has started 2026 strong, trading up more than 13% year to date, as of this writing. While the stock didn't make any big gains following its fourth-quarter earnings report, it showed why this is a top consumer staples stock to own.
Let's take a closer look at the tobacco company's Q4 results and prospects moving forward.
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Smoke-free portfolio continues to power results
Philip Morris' smoke-free portfolio continued to help drive its results in Q4. Its popular nicotine pouch brand Zyn saw shipments climb 18% year over year in Q4, with U.S. shipments up 20%. Meanwhile, the sales volumes of its heated tobacco units (HTUs), including its Iqos system, rose 7.5% to 39.4 billion units. The product continues to see strong growth both in Japan and Europe, and is starting to see strong uptake in major cities outside these areas. Traditional cigarette volumes, meanwhile, dropped by 2.2% to 149.4 billion units.
Image source: Getty Images.
Overall, organic revenue, which excludes currency effects, acquisitions, and dispositions, rose 3.7% year over year to $10.4 billion, while overall revenue climbed 6.8%. Adjusted earnings per share (EPS) increased 9.4% to $1.70.
Looking ahead, Philip Morris forecasted organic revenue to rise by 5% to 7%. It expects total industry cigarette and HTU volumes, excluding China and the U.S., where it does not operate, to fall around 2%. Meanwhile, it expects its cigarette volumes to decline by 3%, hurt by weakness in Mexico and India due to increased excise taxes, but a recovery in Turkey. It expects smoke-free portfolio volumes to rise by high single digits.
On the earnings front, it is projecting adjusted EPS of between $8.38 and $8.53, good for growth of 11% to 13%. Excluding currency impacts, it is looking for adjusted EPS to rise by 7.5% to 9.5% to a range of $8.11 to $8.26.
The company projected it would produce $45 billion in operating cash flow over the next three years in aggregate. It expects growth to accelerate in 2027, helped by the end of taxation equalization in Japan for HTUs, which had been a headwind, and the introduction of Iqos in the U.S. pending regulatory approval on its Iluma delivery device. It is also looking to launch Zyn Ultra, which has higher strength and more flavors, as soon as it gets FDA approval.
Time to buy the stock
Despite some headwinds, Philip Morris International should still see solid growth in 2026 as it continues to have strong pricing power, with growth potentially picking up in 2027 and beyond. Zyn Ultra looks like it could be a nice growth driver, while the eventual mass introduction of Iqos in the U.S. has the potential to be a big opportunity.
Philip Morris is trading at around a forward price-to-earnings (P/E) ratio of under 22 based on the analyst consensus for 2026, making the tobacco stock attractively valued given its combination of growth and defensive nature. I'd continue to own the stock.
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Geoffrey Seiler has positions in Philip Morris International. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
