Will Philip Morris Beat Expectations This Earnings Season?

+17.98%
Upside
91.62
Market
108
Trefis
PM: Philip Morris logo
PM
Philip Morris

Screen Shot 2016-04-18 at 4.57.20 pm

Key Trends In The Quarter:

1) High Exposure To Foreign Currency Fluctuations

  • As the company is U.S. based, deriving all its revenues from international sales, it is highly exposed to fluctuations in the Dollar.
  • There was a fairly significant impact of $1.20 to the reported earnings in 2015.
  • Fortunately, the currency situation has improved, with the Dollar weakening against the Japanese Yen and the Euro.

Dollar against Yen, Euro

2) Popularity Of iQOS And Other Reduced Risk Products (RRPs)

  • According to Philip Morris, RRPs are products that have the potential to reduce individual risk and population harm by users.
  • The company has spent $2B to date working on its RRPs.
  • Harmful constituents and chemical toxicity was reduced by over 90% in iQOS.
  • Since its September launch in Japan, iQOS has grabbed 2.4% of the market share in Tokyo, and 1.6% in the overall expansion area there, with a conversion rate of over 50%.
  • Target of 3-5% share in the current markets, leading to $720M – $1.2B additional margins by 2020.
  • With launches in other markets, the upside is even more attractive.

Have more questions on Philip Morris? See the links below:

 

Relevant Articles
  1. Should You Pick Philip Morris Stock After 7% Fall This Year And Q4 Miss?
  2. Will Philip Morris Stock Rebound After A 10% Fall This Year?
  3. After 8% Drop This Year, Pricing Growth To Bolster Philip Morris’ Q3
  4. Pricing Gains To Drive Philip Morris’ Q2?
  5. Does Philip Morris Stock Have Upside Potential To Its Pre-Inflation Peak?
  6. Here’s What To Expect From Philip Morris’ Q1

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Philip Morris International.
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