Why Philip Morris International stock rose today
Shares of the tobacco giant soared on a strong earnings report.
stock Philip Morris International (afternoon 3.83%) Shares rose today after the international tobacco giant reported strong results in its first-quarter earnings report, helped by the growth of its IQOS heated tobacco sticks.
The stock price closed 3.8% higher on the news.
Image source: Getty Images.
IQOS is heating up Philip Morris stock.
Philip Morris continued its progress toward lead-free products, which account for the majority of its sales, accounting for 39% of its sales in the first quarter. IQOS, a heated tobacco stick product leading the transition to a smoke-free future, recorded a market share of more than 10% for the first time in Europe, and in Japan, IQOS’ market share increased by more than 3 percentage points to 29%.
The company reported unit shipments of heated tobacco increased 20.9% to 33.1 billion units, while unit shipments of cigarettes decreased 0.4% to 143.2 billion units. Total shipments, including oral products, increased 3.6% to $180.5 billion, a positive sign for future growth.
Total revenue increased 9.7% to $8.8 billion, with organic revenue excluding divestitures, acquisitions and currency exchanges up 11%. The results topped analyst estimates of $8.47 billion.
On the income statement, gross margin improved due to price increases and the higher margin profile of lead-free products. Adjusted earnings per share increased 8.7% to $1.50, beating expectations of $1.41. On a constant currency basis, adjusted earnings per share (EPS) increased 23% to $1.70.
“Our strong smoke-free momentum continues with rapid underlying sales growth and accelerating organic net and gross profit growth,” said CEO Jacek Olczak.
Philip Morris’ next move
Looking ahead, management expects strong growth to continue, projecting 14% to 16% growth in the heated tobacco segment and overall organic revenue growth of 7% to 8.5%. Finally, the company forecast adjusted EPS, excluding currency, of $6.55 to $6.67, up 9% to 11% and ahead of the consensus of $6.37.
The results should give investors confidence that the IQOS strategy is paying off. Philip Morris stock continues to look like a good value, especially considering its 5.5% dividend yield.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.
