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Philip Morris Beats Expectations in Q2: ETFs in Focus
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Philip Morris International (PM - Free Report) posted robust second-quarter 2024 results on Jul 23, wherein the top and bottom lines beat the Zacks Consensus Estimate. The company continued to benefit from strong pricing and success in its smoke-free business, especially IQOS and ZYN.
PM has a Zacks Rank #2 (Buy) and a Momentum Score of A, highlighting that the company will continue with its impressive performance. Philip Morris has gained about 17% since the beginning of the year.
Q2 Performance in Detail
The tobacco company reported adjusted earnings per share (EPS) of $1.59, which dropped 0.6% year over year. Markedly, the bottom line beat the Zacks Consensus Estimate of $1.55. However, excluding currency movements, the adjusted EPS for the quarter increased 10.6% year over year to $1.77.
Net revenues of $9.47 billion saw an increase of 5.6% on a reported basis and 9.6% on an organic basis from the same quarter last year, driven by positive pricing variance and a favorable volume/mix. The Zacks Consensus Estimate for the top line was pegged at $9.16 billion, reflecting a positive surprise of 3.38%.
Operating income for the quarter reached $3.44 billion, marking a substantial increase of 46.6% from the year-ago quarter on an organic basis.
Total cigarette volumes grew 2.8% year over year to 197.3 billion units in the quarter, driven by a 13.1% increase in HTU shipments and a 20% rise in Oral smoke-free products across all regions.
PM’s Quest for a Smoke-Free Future
The smoke-free business (SFB) of the world’s largest tobacco company accounted for 38.1% of its total net revenues, highlighting Philip Morris’s goal of transforming into a smoke-free enterprise. Continuing with its robust momentum, SFB’s top line witnessed year-over-year organic growth of 18.3%, with a 22.2% organic increase in its gross profits.
Guidance
For 2024, PM expects adjusted EPS of $6.33-$6.45. The company reported an EPS of $6.01 in 2023. Excluding currency movements, adjusted EPS is envisioned to be $6.67-$6.79, suggesting 11-13% growth from the year-ago reported figure. On a reported basis, management expects EPS of $5.89-$6.01. Notably, the company’s EPS on a reported basis was $5.02 in 2023.
For 2024, PM expects net revenues to increase 7.5-9% on an organic basis, along with organic growth of 11-13% in its operating income. The tobacco giant also anticipates an acceleration in organic smoke-free net revenues and gross profit growth from those reported in 2023.
ETF Impact
Here, we have highlighted some ETFs with significant exposure to Philip Morris.
First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report)
First Trust Morningstar Dividend Leaders Index Fund seeks to track the performance of the Morningstar Dividend Leaders Index with a basket of 100 securities. The fund has gathered an asset base of $4.04 billion and charges an annual fee of 0.45%.
First Trust Morningstar Dividend Leaders Index Fund has an exposure of 6.01% in PM. The fund has gained 16.71% over the past year but has fallen 0.18% over the past three months.
VanEck Durable High Dividend ETF seeks to track the performance of the Morningstar US Dividend Valuation Index with a basket of 79 securities. The fund has gathered an asset base of $51.3 million and charges an annual fee of 0.30%.
VanEck Durable High Dividend ETF has an exposure of 5.58% in PM. The fund has gained 3.16% over the past year but has fallen 1.01% over the past three months.
Invesco S&P Ultra Dividend Revenue ETF seeks to track the performance of the S&P 900 Dividend Revenue-Weighted Index with a basket of 60 securities. The fund has gathered an asset base of $799.6 million and charges an annual fee of 0.39%.
Invesco S&P Ultra Dividend Revenue ETF has an exposure of 5.26% in PM. The fund has gained 19.59% over the past year but has fallen 1.17% over the past three months.
iShares Core High Dividend ETF seeks to track the performance of the Morningstar Dividend Yield Focus Index with a basket of 75 securities. The fund has amassed an asset base of $10.46 billion and charges an annual fee of 0.08%.
iShares Core High Dividend ETF has an exposure of 4.93% in PM. The fund has gained 11.93% over the past year but has fallen 0.41% over the past three months.
iShares U.S. Consumer Staples ETF seeks to track the performance of the Russell 1000 Consumer Staples RIC 22.5/45 Capped Index with a basket of 55 securities. The fund has gathered an asset base of $1.23 billion and charges an annual fee of 0.40%.
iShares U.S. Consumer Staples ETF has an exposure of 4.46% in PM. The fund has gained 1.25% over the past year but has fallen 2.23% over the past three months.
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Philip Morris Beats Expectations in Q2: ETFs in Focus
Philip Morris International (PM - Free Report) posted robust second-quarter 2024 results on Jul 23, wherein the top and bottom lines beat the Zacks Consensus Estimate. The company continued to benefit from strong pricing and success in its smoke-free business, especially IQOS and ZYN.
PM has a Zacks Rank #2 (Buy) and a Momentum Score of A, highlighting that the company will continue with its impressive performance. Philip Morris has gained about 17% since the beginning of the year.
Q2 Performance in Detail
The tobacco company reported adjusted earnings per share (EPS) of $1.59, which dropped 0.6% year over year. Markedly, the bottom line beat the Zacks Consensus Estimate of $1.55. However, excluding currency movements, the adjusted EPS for the quarter increased 10.6% year over year to $1.77.
Net revenues of $9.47 billion saw an increase of 5.6% on a reported basis and 9.6% on an organic basis from the same quarter last year, driven by positive pricing variance and a favorable volume/mix. The Zacks Consensus Estimate for the top line was pegged at $9.16 billion, reflecting a positive surprise of 3.38%.
Operating income for the quarter reached $3.44 billion, marking a substantial increase of 46.6% from the year-ago quarter on an organic basis.
Total cigarette volumes grew 2.8% year over year to 197.3 billion units in the quarter, driven by a 13.1% increase in HTU shipments and a 20% rise in Oral smoke-free products across all regions.
PM’s Quest for a Smoke-Free Future
The smoke-free business (SFB) of the world’s largest tobacco company accounted for 38.1% of its total net revenues, highlighting Philip Morris’s goal of transforming into a smoke-free enterprise. Continuing with its robust momentum, SFB’s top line witnessed year-over-year organic growth of 18.3%, with a 22.2% organic increase in its gross profits.
Guidance
For 2024, PM expects adjusted EPS of $6.33-$6.45. The company reported an EPS of $6.01 in 2023. Excluding currency movements, adjusted EPS is envisioned to be $6.67-$6.79, suggesting 11-13% growth from the year-ago reported figure. On a reported basis, management expects EPS of $5.89-$6.01. Notably, the company’s EPS on a reported basis was $5.02 in 2023.
For 2024, PM expects net revenues to increase 7.5-9% on an organic basis, along with organic growth of 11-13% in its operating income. The tobacco giant also anticipates an acceleration in organic smoke-free net revenues and gross profit growth from those reported in 2023.
ETF Impact
Here, we have highlighted some ETFs with significant exposure to Philip Morris.
First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report)
First Trust Morningstar Dividend Leaders Index Fund seeks to track the performance of the Morningstar Dividend Leaders Index with a basket of 100 securities. The fund has gathered an asset base of $4.04 billion and charges an annual fee of 0.45%.
First Trust Morningstar Dividend Leaders Index Fund has an exposure of 6.01% in PM. The fund has gained 16.71% over the past year but has fallen 0.18% over the past three months.
VanEck Durable High Dividend ETF (DURA - Free Report)
VanEck Durable High Dividend ETF seeks to track the performance of the Morningstar US Dividend Valuation Index with a basket of 79 securities. The fund has gathered an asset base of $51.3 million and charges an annual fee of 0.30%.
VanEck Durable High Dividend ETF has an exposure of 5.58% in PM. The fund has gained 3.16% over the past year but has fallen 1.01% over the past three months.
Invesco S&P Ultra Dividend Revenue ETF (RDIV - Free Report)
Invesco S&P Ultra Dividend Revenue ETF seeks to track the performance of the S&P 900 Dividend Revenue-Weighted Index with a basket of 60 securities. The fund has gathered an asset base of $799.6 million and charges an annual fee of 0.39%.
Invesco S&P Ultra Dividend Revenue ETF has an exposure of 5.26% in PM. The fund has gained 19.59% over the past year but has fallen 1.17% over the past three months.
iShares Core High Dividend ETF (HDV - Free Report)
iShares Core High Dividend ETF seeks to track the performance of the Morningstar Dividend Yield Focus Index with a basket of 75 securities. The fund has amassed an asset base of $10.46 billion and charges an annual fee of 0.08%.
iShares Core High Dividend ETF has an exposure of 4.93% in PM. The fund has gained 11.93% over the past year but has fallen 0.41% over the past three months.
iShares U.S. Consumer Staples ETF (IYK - Free Report)
iShares U.S. Consumer Staples ETF seeks to track the performance of the Russell 1000 Consumer Staples RIC 22.5/45 Capped Index with a basket of 55 securities. The fund has gathered an asset base of $1.23 billion and charges an annual fee of 0.40%.
iShares U.S. Consumer Staples ETF has an exposure of 4.46% in PM. The fund has gained 1.25% over the past year but has fallen 2.23% over the past three months.