Will Philip Morris Stock See Higher Levels?

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PM: Philip Morris logo
PM
Philip Morris

The price of Philip Morris stock (NYSE: PM) has seen a 9% rise in a month, while it is up 6% YTD. Philip Morris sells its tobacco products in non-U.S. markets. Revenue is generated from the sale of cigarettes and its flagship smokeless tobacco offering – IQOS. Although the company’s revenue growth was impacted during the pandemic due to supply disruptions, the sales have recovered over the last year. The company continues to benefit from its pricing power, bolstering Philip Morris’ revenue growth. The company’s operating margins have improved to 38.9% currently, compared to 33.1% in 2019, before the pandemic. Our dashboard on Philip Morris’ Operating Income has more details.

Furthermore, its reduced-risk products (RRPs) have seen a significant rise in revenue contribution to over 29% in 2021, compared to less than 19% in 2019. While the sales of RRPs were adversely impacted due to the semiconductor shortage in the first half of 2021, the constraints have now eased. Investors are optimistic about the outlook for Philip Morris, buoying its stock price growth.

But now that PM has seen a rise of 9% in a month will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a higher chance of a rise in PM stock over the next month. Of 151 instances in the last ten years that PM stock saw a twenty-one-day rise of 9% or more, 87 resulted in PM stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 87 out of 151, or about a 58% chance of a rise in PM stock over the coming month. See our analysis on Philip Morris Stock Chance of Rise for more details.

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Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years’ data

  • After moving 2.2% or more over five days, the stock rose on 57% of the occasions in the next five days.
  • After moving 7.7% or more over ten days, the stock rose on 46% of the occasions in the next ten days.
  • After moving 9.2% or more over a twenty-one-day period, the stock rose on 58% of the occasions in the next twenty-one days.

This pattern suggests a higher chance of a rise in PM stock over the next five days and the next month, while it is likely to see lower levels in the next ten days.

Philip Morris (PM) Stock Return (Recent) Comparison With Peers

  • Five-Day Return: VGR highest at 5.3%; BTI lowest at -11.1%
  • Ten-Day Return: VGR highest at 20.9%; BTI lowest at -9.8%
  • Twenty-One Day Return: VGR highest at 22.1%; BTI lowest at -4.8%

While PM stock may see higher levels, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Philip Morris vs. United States Steel.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Apr 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 PM Return 8% 7% 11%
 S&P 500 Return -2% -7% 99%
 Trefis Multi-Strategy Portfolio 0% -7% 265%

[1] Month-to-date and year-to-date as of 4/14/2022
[2] Cumulative total returns since the end of 2016

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