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Philip Morris' Shares Advance on Raised View: Time to Buy?
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Tobacco giant, Philip Morris International Inc. (PM - Free Report) shares advanced following management’s announcement that it expects lower currency woes in 2017. In fact, the company’s shares have hit a 52-week high of $106.67 on Feb 23, 2017. The shares eventually closed at $106.52 almost 2% higher than the previous day.
Further, shares of the company gained 16.4% in the past one year, outperforming the Zacks categorized Consumer Staples sector which witnessed an increase of 7.6% during the same period.
Factors Behind the Rally
In an investor conference held on Feb 22, 2017, Philip Morris raised 2017 earnings guidance anticipating lower currency headwind for the year.
The Marlboro maker stated that it expects full-year reported earnings per share to be in the range of $4.80–$4.95, compared with a range of $4.70–$4.85 expected earlier in the fourth quarter conference call in the first week of Feb 2017. The guidance represents a projected increase of approximately 9–12% compared with adjusted diluted earnings per share of $4.48 in 2016.
The increased guidance reflects lower currency headwind of 8 cents per share for full-year 2017, compared with unfavorable currency of 18 cents per share expected previously.
Philip Morris reported modest results during fourth-quarter 2016 wherein earnings gained 36% compared with the prior-year quarter figure driven by higher sales. However, the figure missed the consensus mark. Excluding an unfavorable currency impact of 13 cents, earnings surged 52% year over year.
The company posted decent top-line results wherein net sales gained 9.1% (up 10.5% excluding currency) to $7.0 billion, outpacing the Zacks Consensus Estimate of $6.39 billion. The sales gain can be attributed to higher sales in Asia and European Union region.
Investors’ optimism was also reflected in the share price movement since Philip Morris filed an application with the U.S. Food and Drug Administration (FDA) for its IQOS products (Heatsticks that heat tobacco instead of burning it) in Dec 2016. Once the Modified Risk Tobacco Product (MRTP) claim is approved by FDA, the company will be able to enjoy a significant marketing advantage over other reduced risk tobacco products that are being sold currently.
Zacks Rank & Key Picks
Philip Morris currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the consumer staples sector include:
Pinnacle Foods Inc. holds a Zacks Rank #2 and has an expected earnings growth rate of 8.3%.
Con Agra Foods Inc. (CAG - Free Report) also carries a Zacks Rank #2 and has an expected earnings growth rate of 8%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Philip Morris' Shares Advance on Raised View: Time to Buy?
Tobacco giant, Philip Morris International Inc. (PM - Free Report) shares advanced following management’s announcement that it expects lower currency woes in 2017. In fact, the company’s shares have hit a 52-week high of $106.67 on Feb 23, 2017. The shares eventually closed at $106.52 almost 2% higher than the previous day.
Further, shares of the company gained 16.4% in the past one year, outperforming the Zacks categorized Consumer Staples sector which witnessed an increase of 7.6% during the same period.
Factors Behind the Rally
In an investor conference held on Feb 22, 2017, Philip Morris raised 2017 earnings guidance anticipating lower currency headwind for the year.
The Marlboro maker stated that it expects full-year reported earnings per share to be in the range of $4.80–$4.95, compared with a range of $4.70–$4.85 expected earlier in the fourth quarter conference call in the first week of Feb 2017. The guidance represents a projected increase of approximately 9–12% compared with adjusted diluted earnings per share of $4.48 in 2016.
The increased guidance reflects lower currency headwind of 8 cents per share for full-year 2017, compared with unfavorable currency of 18 cents per share expected previously.
Philip Morris reported modest results during fourth-quarter 2016 wherein earnings gained 36% compared with the prior-year quarter figure driven by higher sales. However, the figure missed the consensus mark. Excluding an unfavorable currency impact of 13 cents, earnings surged 52% year over year.
The company posted decent top-line results wherein net sales gained 9.1% (up 10.5% excluding currency) to $7.0 billion, outpacing the Zacks Consensus Estimate of $6.39 billion. The sales gain can be attributed to higher sales in Asia and European Union region.
Investors’ optimism was also reflected in the share price movement since Philip Morris filed an application with the U.S. Food and Drug Administration (FDA) for its IQOS products (Heatsticks that heat tobacco instead of burning it) in Dec 2016. Once the Modified Risk Tobacco Product (MRTP) claim is approved by FDA, the company will be able to enjoy a significant marketing advantage over other reduced risk tobacco products that are being sold currently.
Zacks Rank & Key Picks
Philip Morris currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the consumer staples sector include:
Helen of Troy Limited (HELE - Free Report) carries a Zacks Rank #2 (Buy) and has an expected earnings growth rate of 10.8%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Pinnacle Foods Inc. holds a Zacks Rank #2 and has an expected earnings growth rate of 8.3%.
Con Agra Foods Inc. (CAG - Free Report) also carries a Zacks Rank #2 and has an expected earnings growth rate of 8%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>