Philip Morris (PM) Q4 Earnings: Low Cigarette Volumes To Hurt
Zacks Investment Research | Jan 31, 2019 08:31PM ET
Philip Morris International Inc. (NYSE:PM) is slated to release fourth-quarter and full-year 2018 results on Feb 7. The company’s earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average being 9.3%. Moreover, the company’s top and bottom line have been rising year-on-year for six and five straight quarters, respectively. Let’s take a look at the factors that are likely to impact this tobacco giant’s upcoming quarterly announcement.
RRPs and Pricing to Continue Aiding
Reduced risk products (RRP’s) are rapidly becoming popular, driven by consumers’ rising health consciousness and awareness regarding the harmful impacts of nicotine. With radical investments for undertaking research and development in this space, Phillip Morris is pioneering the shift from harmful tobacco products to scientific and low-risk alternatives. In fact, the company’s IQOS, a smokeless cigarette, is among one of the leading RRPs in the industry.
To continue catering to the rising demand for RRPs, the company is investing toward product and capacity expansion. Notably, the company has undertaken plant conversions by transforming them from cigarette to RRPs manufacturing facilities. We expect that such endeavors will fuel Philip Morris’s performance in the upcoming quarterly release.
Apart from this, strong pricing is enabling Philip Morris to generate substantial revenues in the combustible category. Moreover, the price hikes enable the company to maintain margins at the desired level. As smokers tend to absorb price increases owing to their addiction, this strategy could be of some help in the near term.
Philip Morris International Inc. Price, Consensus and EPS Surprise
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