A month has gone by since the last earnings report for Philip Morris (PM) . Shares have added about 3% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Philip Morris due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.How Have Estimates Been Moving Since Then?It turns ...

During the first quarter, billionaire investor Philippe Laffont of Coatue Management added one of my favorite stocks to his portfolio: Philip Morris International (PM 0.73%). The tobacco company has the rare combination of being a growth stock in a defensive industry.Laffont is best known for being a tech investor, and this can be seen in the makeup of his portfolio. Among his top-10 holdings are Meta Platforms, Amazon, Taiwan Semiconductor, Microsoft, Nvidia, Spotify, and Atlassian. However, he will ventur ...

Group 1: AT&T - AT&T reported strong first-quarter results, driven by significant postpaid phone and fiber net subscriber additions, and retained its full-year guidance [3][4] - The company offers a quarterly dividend of $0.2775 per share, resulting in an annualized dividend of $1.11 per share and a dividend yield of 4.0% [4] - RBC Capital analyst raised the price target for AT&T stock to $30 from $28, noting that the company exceeded revenue expectations despite excluding $100 million of one-time EBITDA benefits [4][5] Group 2: Philip Morris International - Philip Morris International reported solid first-quarter results, driven by strong demand for smoke-free products, and offers a quarterly dividend of $1.35 per share, leading to an annualized dividend of $5.40 per share and a yield of nearly 3.2% [7][8] - Stifel analyst reaffirmed a buy rating on PM stock and increased the price target to $186 from $168, citing strong momentum from smoke-free product mix, pricing, and volume growth [8] - The company’s smoke-free products now account for over 40% of revenue and gross profit, supporting durable growth into 2025 and beyond [9] Group 3: Texas Instruments - Texas Instruments reported first-quarter earnings and revenue that surpassed Wall Street estimates, reflecting strong demand for analog chips, and provided better-than-expected guidance for the June quarter [13][14] - The company pays a quarterly dividend of $1.36 per share, resulting in an annualized dividend of $5.44 per share and a dividend yield of 3.3% [14] - Evercore analyst reiterated a buy rating on TXN stock with a price target of $248, expecting the company to deliver upside surprises through 2025 and into 2026 [14][16]

Core Viewpoint - The tobacco sector is experiencing a resurgence, driven by the growth of new-generation nicotine products rather than traditional cigarettes [1][2]. Group 1: Market Dynamics - The tobacco sector had been neglected by investors due to volume declines and ESG investment mandates [1]. - New-generation nicotine products, such as nicotine pouches, are leading the market recovery, with Philip Morris International (PM) capturing 42% of its net revenue from this category [2]. - Philip Morris International's stock has increased by 86% over the past 12 months, providing substantial returns for shareholders [2]. Group 2: Product Categories - Three major nicotine categories are replacing traditional cigarettes: electronic vaping, heat-not-burn tobacco, and nicotine pouches [3]. - Philip Morris International leads in the heat-not-burn category with its Iqos brand, which holds a 77% market share globally [4]. - The Zyn nicotine pouch brand is growing rapidly, with a 53% year-over-year increase in the U.S. and 182% internationally, excluding Nordic markets [5]. - The VeeV vaping devices are currently small in volume but are experiencing 100% year-over-year growth [6]. Group 3: Financial Performance - Philip Morris International is seeing stable volume from its traditional cigarette business, with a 1.1% year-over-year increase in volume in Q1 [7]. - The combustibles segment has shown gross profit growth of 6.6% year-over-year in 2024 and 5.3% in Q1 of 2025, contributing to earnings growth [7]. - Operating income reached a record $13.9 billion over the past 12 months, primarily due to stable volumes and pricing power [8]. - Free cash flow is expected to align with operating income as manufacturing investments for alternative nicotine brands are completed [8]. Group 4: Dividend Growth Potential - Philip Morris International's stock currently has a dividend yield of 3.1%, down from nearly 6% in late 2020 [12]. - The company has a dividend per share of $5.35 and free cash flow per share of $6.55, indicating the ability to sustain dividend growth despite current cash flow challenges [13]. - The company is projected to grow its dividend per share by 5% annually for the next four years, supported by increasing free cash flow [14]. - As free cash flow per share increases, the company will be positioned to consistently grow its dividend payouts, making it an attractive option for dividend-seeking investors [14].

Market Overview - The S&P 500 is down 5.5% year-to-date due to uncertainty, tariffs, fears of an economic slowdown, and concerns over stretched valuations, particularly in technology stocks [1] - Investors are seeking safety in defensive sectors and reliable dividend payers as a result of the risk-off environment [2] Dividend Stocks Performance - Dividend stocks with strong yields and relative outperformance have become increasingly attractive, with some dividend aristocrats and kings emerging as top performers [2] Philip Morris International - Philip Morris has seen a 41% increase in stock price year-to-date, making it the fourth-best-performing stock in the S&P 500 [4] - The company offers a 3.17% dividend yield and has a history of 17 consecutive years of dividend increases [4] - The strategic pivot towards smoke-free products is driving growth, with a goal to generate two-thirds of revenue from these products by 2030 [5] - Q1 2025 earnings were reported at $1.69 per share, beating estimates by $0.08, with revenue growing 5.8% to $9.3 billion [5][6] AT&T - AT&T's stock has surged 20% year-to-date and 65% over the past year, with a current dividend yield of 4.07% [8] - The company reported Q1 2025 earnings of $0.51 per share, slightly missing consensus estimates, but revenue grew 2% year-over-year to $30.63 billion [9] - AT&T holds a Moderate Buy consensus rating from analysts, with a price target implying nearly 5% upside from current levels [10] Williams Companies - Williams Companies has seen a 10% increase in stock price year-to-date, with a 3.35% dividend yield supported by a three-year dividend growth rate of 5% [12][13] - The company is set to report Q1 2025 earnings on May 5, with previous EPS expectations met at $0.47 [14] - Analysts have raised price targets for Williams, maintaining a Moderate Buy consensus rating [14]

Group 1 - The core point of the article highlights the continued success of the smokeless tobacco product Zyn, leading parent company Philip Morris International to exceed analyst expectations and raise earnings estimates for 2025 and beyond [1] - Smoking rates in the US and other developed markets are declining, which may contribute to the increased focus on smokeless tobacco products [1]

Economic Environment - Economic uncertainty is currently heightened due to tariffs and associated price increases, potential inflation, prolonged job searches, and stock market volatility [1] Investment Focus - The primary interest remains in stocks, mutual funds, and ETFs for intermediate- to long-term investing and retirement purposes [1] - The individual has engaged in various investment vehicles including stocks, options, mutual funds, bonds, ETFs, commodities, futures, and forex since 2007 [1] Research and Writing - A strong interest in investment research and analysis has led to a career in freelance financial writing since 2010 [1] - Articles have been published on notable financial websites such as Investopedia, Google Finance, Yahoo Finance, and CBS MoneyWatch, among others [1]

Core Viewpoint - Philip Morris International has experienced significant stock price appreciation, with shares up nearly 40% in 2025 and over 75% in the past year, following strong earnings results [1][2] Group 1: Earnings Performance - In Q1, Zyn, a nicotine pouch product, saw U.S. shipment volumes increase by 53% to 202 million cans, with international volumes also rising 53% [4][3] - Overall oral product shipments grew by 27%, while traditional cigarette volumes rose by 1.1% to 144.8 billion units [8][7] - Organic revenue increased by 10% year over year to $9.3 billion, with adjusted earnings per share climbing 17% to $1.76 [8][9] Group 2: Growth Drivers - Zyn and heated tobacco units (HTUs), including the IQOS system, are key growth drivers, with HTUs volumes increasing nearly 12% to 37.1 billion units [7][6] - The company expects U.S. Zyn shipments to reach between 800 million and 840 million cans, up from a previous forecast of 780 million to 820 million cans [5][4] - The smoke-free business saw organic revenue surge by 20%, indicating strong demand for non-combustible products [9][10] Group 3: Future Outlook - Philip Morris has maintained its full-year outlook, with organic revenue growth projected between 6% to 8% and adjusted EPS expected to be between $7.01 and $7.14 [11][12] - The company is expanding its capacity in the U.S. for Zyn and testing IQOS in new markets, indicating ongoing growth opportunities [14][13] - The stock is considered undervalued with a forward P/E ratio of 23 and a PEG ratio under 0.4, suggesting potential for further appreciation [15][16]

Core Viewpoint - Growth investors are attracted to stocks with above-average financial growth, but identifying such stocks can be challenging due to associated risks and volatility [1] Group 1: Company Overview - Philip Morris (PM) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 4%, but projected EPS growth for this year is expected to be 10.7%, surpassing the industry average of 10.6% [5] Group 2: Financial Metrics - Earnings growth is crucial for attracting investor attention, with double-digit growth being particularly favorable [4] - Philip Morris has a year-over-year cash flow growth of 5.5%, significantly higher than the industry average of 0.3% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 5.9%, compared to the industry average of 4.6% [7] Group 3: Earnings Estimates - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements [8] - The current-year earnings estimates for Philip Morris have increased by 4.6% over the past month [9] Group 4: Investment Potential - Philip Morris has earned a Growth Score of B and a Zacks Rank 2 due to positive earnings estimate revisions, indicating potential for outperformance and suitability for growth investors [11]

Financial Performance - Net revenues for the three months ended March 31, 2025, were $9.3 billion, an increase of $0.5 billion or 5.8% compared to the same period in 2024[264]. - Excluding currency and acquisitions/divestitures, net revenues increased by 10.2%, driven by favorable pricing and higher smoke-free product volume[266]. - Diluted earnings per share (EPS) for the three months ended March 31, 2025, increased to $1.72, representing a 24.6% change from $1.38 in the same period of 2024[270]. - Operating income for the three months ended March 31, 2025, was $3.54 billion, compared to $3.05 billion in the same period of 2024[280]. - Total PMI net revenues for Q1 2025 reached $9,301 million, a 5.8% increase from $8,793 million in Q1 2024[282]. - Net earnings attributable to PMI for the first quarter of 2025 were $2.7 billion, a 25.2% increase compared to the previous year[308]. - Operating income in SSEA, CIS & MEA increased by 19.2% to $920 million, with a 14.1% increase excluding currency and acquisitions/divestitures[325]. - Operating income for the first quarter of 2025 increased by 16.4% to $3.544 billion, with an 18.7% increase excluding currency and acquisitions/divestitures[306]. Product Performance - Total shipment volume increased by 3.9% to 187.8 billion equivalent units, with smoke-free products up by 14.4% and cigarette volumes up by 1.1%[300]. - Total smoke-free revenues increased by 15.0% to $3,895 million, up from $3,386 million in the same quarter last year[282]. - Heated Tobacco Units (HTUs) shipment volume increased by 11.9% to 37,089 million units, compared to 33,134 million units in Q1 2024[287]. - Nicotine pouches shipment volume surged by 53.3% to 223.4 million cans, up from 145.7 million cans in Q1 2024[287]. - Oral SFP shipments increased by 42.0% to 237 million cans, predominantly driven by ZYN nicotine pouches in the U.S.[343]. Market Trends - The Americas region contributed $1.27 billion in net revenues for Q1 2025, up from $996 million in Q1 2024[280]. - The Americas region saw a significant increase in smoke-free revenues, with a 69.4% rise to $783 million compared to $462 million in Q1 2024[282]. - The estimated total international industry volume for cigarettes and HTUs decreased by 0.6% during the quarter, with a projected decline of around 1% for the full year 2025[299]. - The estimated total market for cigarettes and HTUs in Europe decreased by 4.8% to 118.3 billion units, with a 6.6% decrease for cigarettes[314]. - Total market for cigarettes and HTUs, excluding the U.S., increased by 1.3% to 45.2 billion units, with Brazil up by 12.7%[339]. Strategic Initiatives - The company acquired Swedish Match AB in 2022, enhancing its portfolio in oral nicotine delivery and supporting its transformation to a smoke-free company[256]. - The company has invested over $14 billion since 2008 in developing smoke-free products, aiming to end cigarette sales[249]. - PMI aims to continue developing and expanding its SFP brand portfolio and market positions, exploring new growth opportunities beyond current business[355]. - The company has integrated the production of heated tobacco units into existing manufacturing facilities and is optimizing its manufacturing infrastructure[359]. - The Altria Agreement allows PMI to fully commercialize IQOS in the U.S., providing a clear path to expand its market presence[361]. Regulatory Environment - The WHO's Framework Convention on Tobacco Control has 182 countries and the EU as parties, aiming to reduce tobacco use through various control measures[368]. - The EU's Tobacco Products Directive mandates health warnings covering 65% of cigarette pack surfaces and bans characterizing flavors in certain tobacco products[380]. - The EU banned characterizing flavors in heated tobacco products effective October 23, 2023, impacting a significant portion of SFP products sold in the EU[385]. - The FDA has established a regulatory framework for assessing "New Tobacco Products" and "Modified Risk Tobacco Products," influencing international regulatory approaches[400]. - Significant markets have imposed bans or severe restrictions on the sale of SFPs, including Argentina, Brazil, Canada, and India[375]. Challenges and Risks - Illicit trade may account for up to 15% of global cigarette consumption, with an estimated 8% in the EU for 2023[432]. - The company is investing substantial resources to combat illicit trade, including legal remedies and cooperation with governmental authorities[433]. - The global tariff environment is expected to remain volatile through 2025, with the company actively adapting operations accordingly[446]. - The company continues to monitor developments in new sanctions and trade laws to ensure compliance[447].