Here’s What To Expect From Philip Morris’ Q1

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Philip Morris (NYSE: PM) is scheduled to report its Q1 2023 results on Thursday, April 20. We expect PM stock to trade lower, with its revenue and earnings likely falling below the street expectations. Although the company should benefit from continued uptick in heated tobacco units, forex headwinds, and continued supply chain pressure is expected to weigh on the overall revenue growth. Furthermore, our forecast indicates that PM stock is appropriately priced, as discussed below. Our interactive dashboard analysis of Philip Morris Earnings Preview has additional details.

(1) Revenues expected to be marginally below the consensus estimates

  • Trefis estimates Philip Morris’ Q1 2023 revenues to be around $8.0 billion, reflecting a 3% y-o-y rise and marginally below the $8.1 billion consensus estimate.
  • 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. It acquired Swedish Match, Scandinavia’s largest snus (a moist smokeless tobacco product) manufacturer, in Q4 last year.
  • While the company is expected to see continued growth in heated tobacco units, currency headwinds will likely weigh on its top-line growth.
  • Looking at Q4 2022, the company reported net revenue of $8.2 billion, marking a 0.6% rise over the prior-year quarter.
  • The company saw a 1.2% increase in total shipments, primarily heated tobacco units, up 26%, while cigarette volume was down 2.8% in Q4.
  • Our dashboard on Philip Morris Revenues has more details on the company’s segments.
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(2) EPS likely to be slightly below the consensus estimates

  • Philip Morris’ Q1 2023 adjusted earnings per share (EPS) is expected to be $1.33 per Trefis analysis, slightly below the consensus estimate of $1.35.
  • The company’s adjusted EPS of $1.39 in Q4 2022 was up two cents from $1.37 in the prior-year quarter.
  • The company’s operating margin contracted 50 bps during the quarter. Our Philip Morris Operating Income Comparison dashboard has more details.
  • For the full-year 2023, we expect the adjusted EPS to be higher at $6.30 compared to $5.98 in 2022.

(3) PM stock looks appropriately valued

  • We estimate Philip Morris’ Valuation to be around $106 per share, just 7% above the current market price of $99.
  • At its current levels, PM stock is already trading at a 16x forward EPS estimate of $6.30, compared to the last three-year average of 15x, implying that it is appropriately priced.
  • Still, if the company reports upbeat Q1 results and provides the 2023 outlook better than the street estimates, the P/E multiple will likely be revised upward, resulting in higher levels for PM stock.

While PM stock looks appropriately priced, it is helpful to see how Philip Morris’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Philip Morris vs. Entergy.

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 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 PM Return 3% -1% 9%
 S&P 500 Return 1% 8% 85%
 Trefis Multi-Strategy Portfolio 1% 9% 244%

[1] Month-to-date and year-to-date as of 4/17/2023
[2] Cumulative total returns since the end of 2016

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