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Philip Morris' (PM) New Investment to Fuel Smoke-Free Growth?
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Philip Morris International Inc. (PM - Free Report) is pretty much on track toward a smoke-free future. The company unveiled a $600 million investment through one of its U.S. affiliates to open a leading-edge manufacturing facility in Aurora, CO. This facility, set to produce Swedish Match ZYN nicotine pouches, aims to cater to the burgeoning global demand for smoke-free products (from legal-age consumers).
The construction of this facility is expected to begin later this year, with preliminary operations likely to begin by the end of 2025 and full-scale production expected to start in 2026. The construction phase alone is projected to create nearly 5,000 jobs and contribute approximately $1 billion to the economy. We believe that this investment offers several strategic advantages and potential growth opportunities.
Expansion in Growth Areas
As global consumer preferences shift toward healthier alternatives, Philip Morris’ commitment to expanding its production capacity aligns well with market trends. This strategic move not only caters to the current demand but also positions the tobacco giant well for sustained growth in the smoke-free product segment.
By increasing production capacity in the United States, PM intends to serve the increasing demand for ZYN nicotine pouches both domestically and internationally. The ongoing investments in the Aurora and Owensboro facilities are designed to support the adoption growth rate of ZYN among U.S. adult nicotine consumers and facilitate additional capacity for exports. This dual focus on domestic and international markets can fuel revenue growth and diversify Philip Morris’ income streams.
Philip Morris has a solid history of investments in smoke-free products, amounting to $12.5 billion globally since 2008, which reflects its strategic focus on innovation and market leadership. The strategic expansion into the U.S. market, particularly with the acquisition of Swedish Match in late 2022, positions Philip Morris to leverage its existing market presence and brand recognition to drive growth.
The company’s mission to move adults away from cigarettes to scientifically substantiated, better alternatives also highlights its commitment to public health and innovation.
Image Source: Zacks Investment Research
Moving Toward a Smoke-Free Future
Philip Morris’ significant investment in the Aurora manufacturing facility is a strategic move that aligns with its long-term vision of growth and innovation in the smoke-free product segment. Given consumers’ rising inclination toward reduced-risk products, the company has been progressing well with its business transformation, with smoke-free products generating 39% of the company’s net revenues in the first quarter of 2024. During the quarter, revenues from the smoke-free business surged 21.1% and witnessed continued strength in IQOS performance.
Philip Morris aims to generate more than two-thirds of its total revenues from smoke-free products by 2030. All said, we believe that the above development signifies potential revenue growth, market expansion and a strengthened competitive position. These upsides keep this Zacks Rank #2 (Buy) company well-placed in the evolving tobacco and nicotine product landscape.
Shares of PM have rallied 16.3% in the past three months compared with the industry’s growth of 14.5%.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
BRF (BRFS - Free Report) , which engages in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products, currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from the year-ago reported figures.
Treehouse Foods (THS - Free Report) is a manufacturer of packaged foods and beverages. The company currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year sales and earnings indicates a decline of 1.6% and 8.5%, respectively, from the prior-year reported level. THS has a negative trailing four-quarter average earnings surprise of 4.5%.
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Philip Morris' (PM) New Investment to Fuel Smoke-Free Growth?
Philip Morris International Inc. (PM - Free Report) is pretty much on track toward a smoke-free future. The company unveiled a $600 million investment through one of its U.S. affiliates to open a leading-edge manufacturing facility in Aurora, CO. This facility, set to produce Swedish Match ZYN nicotine pouches, aims to cater to the burgeoning global demand for smoke-free products (from legal-age consumers).
The construction of this facility is expected to begin later this year, with preliminary operations likely to begin by the end of 2025 and full-scale production expected to start in 2026. The construction phase alone is projected to create nearly 5,000 jobs and contribute approximately $1 billion to the economy. We believe that this investment offers several strategic advantages and potential growth opportunities.
Expansion in Growth Areas
As global consumer preferences shift toward healthier alternatives, Philip Morris’ commitment to expanding its production capacity aligns well with market trends. This strategic move not only caters to the current demand but also positions the tobacco giant well for sustained growth in the smoke-free product segment.
By increasing production capacity in the United States, PM intends to serve the increasing demand for ZYN nicotine pouches both domestically and internationally. The ongoing investments in the Aurora and Owensboro facilities are designed to support the adoption growth rate of ZYN among U.S. adult nicotine consumers and facilitate additional capacity for exports. This dual focus on domestic and international markets can fuel revenue growth and diversify Philip Morris’ income streams.
Philip Morris has a solid history of investments in smoke-free products, amounting to $12.5 billion globally since 2008, which reflects its strategic focus on innovation and market leadership. The strategic expansion into the U.S. market, particularly with the acquisition of Swedish Match in late 2022, positions Philip Morris to leverage its existing market presence and brand recognition to drive growth.
The company’s mission to move adults away from cigarettes to scientifically substantiated, better alternatives also highlights its commitment to public health and innovation.
Image Source: Zacks Investment Research
Moving Toward a Smoke-Free Future
Philip Morris’ significant investment in the Aurora manufacturing facility is a strategic move that aligns with its long-term vision of growth and innovation in the smoke-free product segment. Given consumers’ rising inclination toward reduced-risk products, the company has been progressing well with its business transformation, with smoke-free products generating 39% of the company’s net revenues in the first quarter of 2024. During the quarter, revenues from the smoke-free business surged 21.1% and witnessed continued strength in IQOS performance.
Philip Morris aims to generate more than two-thirds of its total revenues from smoke-free products by 2030. All said, we believe that the above development signifies potential revenue growth, market expansion and a strengthened competitive position. These upsides keep this Zacks Rank #2 (Buy) company well-placed in the evolving tobacco and nicotine product landscape.
Shares of PM have rallied 16.3% in the past three months compared with the industry’s growth of 14.5%.
3 Other Staple Bets Worth Considering
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter earnings surprise of 118.2%, on average. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
BRF (BRFS - Free Report) , which engages in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products, currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from the year-ago reported figures.
Treehouse Foods (THS - Free Report) is a manufacturer of packaged foods and beverages. The company currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year sales and earnings indicates a decline of 1.6% and 8.5%, respectively, from the prior-year reported level. THS has a negative trailing four-quarter average earnings surprise of 4.5%.