Things to note as Philip Morris (PM) lines up for Q2 earnings


Philip Morris International Inc. (NYSE: PM) is likely to see lower revenue and earnings when it reports second quarter 2022 results on July 21. figure.

Zacks’ consensus estimate for quarterly earnings rose a penny to $1.23 in the past 30 days, suggesting a 21.7% decline from the figure reported in the quarter. last year. This tobacco giant has a surprise on the profits of the last four quarters of 3.5% on average. PM posted a surprise profit of 5.4% in the last reported quarter.

Things to note

Philip Morris is benefiting from its focus on reduced risk products (RRPs), given the growing consumer preference for them. To that end, its IQOS ranks among one of the leading RRPs in the industry. However, on November 29, 2021, an import ban and cease and desist order was imposed by the United States International Trade Commission regarding IQOS Platform 1 products. These include consumables and counterfeit components.

During its first quarter 2022 earnings call, management emphasized that going into 2022, it expects continued uncertainty regarding the pace of recovery in the operating landscape caused by the pandemic, particularly in the Asia region. South and Southeast. Management expects a gradual and continued recovery of duty-free business outside of Asia and no significant recovery in Asia.

Apart from that, the rising cost is a worrying factor. In the first quarter of 2022, the adjusted operating margin decreased by 30 basis points on an organic basis. The decline can be attributed to comparisons with the strong margin performance of the previous year, the increase in the initial cost of the IQOS ILUMA devices and inflation on certain key elements of the supply chain such as salaries, direct energy and materials and the increase in air freight (which, in turn, was aggravated by the war in Ukraine). In 2022, gross margin is expected to be moderately low due to the increased initial cost of IQOS ILUMA, high logistics costs, growth-oriented investments in the smoke-free space, and inflation related to the supply chain. In addition, in the second quarter of 2022, the proforma operating margin should have further decreased on an organic basis.

That said, Philip Morris benefited from its strong price actions. Although higher prices may lead to a possible decline in cigarette consumption, it is found that smokers tend to absorb price increases due to the addictive quality of cigarettes. A higher price differential was a plus for business performance in most regions in the first quarter of 2022. The continuation of these trends remains a plus.

What the Zacks Model Reveals

Our proven model predicts an earnings beat for PM this time. The combination of a positive earnings ESP and a Zacks rank of #1 (strong buy), 2 (buy), or 3 (hold) increases the chance of an earnings beat, which is the case here.

Philip Morris wears a Zacks rank #3 and +0.95% ESP gain. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

Other actions with the favorable combination

Here are a few companies you might want to consider, as our model shows that they also have the right combination of elements to post a pace of profit.

Corteva (NYSE: CTVA) currently has an earnings ESP of +8.12% and a Zacks ranking of 2. The company is expected to record an earnings boost when it reports Q2 2022 results. Zacks consensus estimate for earnings quarterly was unchanged at $1.46 per share over the past 30 days. The consensus rating for CTVA’s earnings suggests growth of 4.3% from the figure reported a year ago.

Corteva’s revenue is expected to grow year over year. Zacks’ consensus estimate for quarterly revenue is pegged at $6.2 billion, suggesting a 9.4% increase over the figure reported in the year-ago quarter. CTVA has recorded a profit pace of 22.3%, on average, over the past four quarters.

Archer Daniels (NYSE: ADM) currently has an earnings ESP of +2.59% and a Zacks ranking of 3. The company is expected to record an earnings boost when it reports Q2 2022 results. Zacks consensus estimate for earnings ADM’s quarterly shares rose nearly 3% over the past seven days to $1.74 per share. The consensus mark indicates growth of 30.8% over the number reported for the prior year quarter.

Archer Daniels revenue is expected to grow year over year. Zacks’ consensus estimate for quarterly revenue is pegged at $25.3 billion, suggesting a 10.2% increase from the figure reported in the year-ago quarter. ADM has recorded a profit rate of 22.3%, on average, over the past four quarters.

Altria Group (NYSE:MO) currently has an earnings ESP of +0.27% and a Zacks ranking of 3. The company is expected to report lower revenue when it reports Q2 2022 results. The consensus brand MO’s quarterly revenue is pegged at $5.4 billion, suggesting a 3.9% decline from the figure reported in the year-ago quarter.

Altria’s quarterly earnings consensus mark rose a penny over the past 30 days to $1.25 a share. MO’s second-quarter consensus earnings estimate suggests a 1.6% decline from the figure released a year ago. Altria has posted a 1.2% profit pace, on average, over the past four quarters.

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The previous article comes from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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