Philip Morris International Q3 Earnings: Can NYSE:PM Hit Its $1.36 EPS Target?

in EARNINGS/INVESTING IDEAS by

Philip Morris International Inc. (NYSE:PM) is scheduled to report Q3 earnings results on October 20, 2020.

The company is expected to report earnings of $1.36/share on revenue of $7.267 billion. The consensus earnings per share (EPS) of $1.36/share is based on a poll of 14 analysts and represents a decline in eps of −4.9% over the same quarter last year, when the company reported earnings of $1.43/share.

The revenue forecast of $7.267 billion based on a poll of 11 analysts implies a year-over-year (YoY) decline in revenue of −4.9%. Last year the company reported $7.642 billion in revenue for the quarter.

Expected to report EPS contraction of −4.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $7,266.84 $7,642.00 −4.9%
EPS $1.36 $1.43 −4.9%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Philip Morris International Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.10 $1.29 17.4% Beat
Q1, 2020 $1.13 $1.21 6.9% Beat
Q4, 2019 $1.21 $1.22 0.9% Beat
Q3, 2019 $1.36 $1.43 5.2% Beat
Q2, 2019 $1.33 $1.46 10.1% Beat
Q1, 2019 $1.01 $1.09 8.3% Beat
Q4, 2018 $1.16 $1.25 7.4% Beat
Q3, 2018 $1.29 $1.44 11.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 4.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 21, 2020 $72.89 $76 4.3% Increase
April 21, 2020 $76.86 $73.06 −4.9% Decline
February 6, 2020 $83.94 $87.45 4.2% Increase
October 17, 2019 $79.10 $80.55 1.8% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.68, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.68 implies a 0.4% chance of earnings manipulation.

Fundamentals And Technical Analysis

Philip Morris International Inc. is currently trading at $79.07/share, down −0.3% for the day. The company is trading at approximately 87.5% of its 52-week high of $90.17/share. The company’s stock price is up 4.0% since the last earnings report and down −0.3% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 55.93 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:PM Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 16.97 and a forward P/E multiple of 15.57.

Philip Morris International Inc.’s current share price also implies a price-to-book (P/B) multiple of −10.28. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $79.07
P/E Ratio 17.0x
P/E Ratio (Fwd) 15.6x
PEG Ratio −2.4
Total Debt / Total Capital 19.1%
Levered Free Cash Flow $7.783 billion
EV / EBITDA 12.2x

Finbox

Philip Morris International Inc. is a large-cap stock with a market capitalization of $123.4 billion and a total enterprise value of $150.8 billion. The company operates in the Consumer Staples sector and the Tobacco industry.

Philip Morris International Inc., through its subsidiaries, manufactures and sells cigarettes, other nicotine-containing products, smoke-free products, and related electronic devices and accessories. The company offers IQOS smoke-free products, including heated tobacco and nicotine-containing vapor products under the HEETS, HEETS Marlboro, and HEETS FROM MARLBORO brands, as well as the Marlboro HeatSticks and Parliament HeatSticks brands. It also sells its products under the Marlboro, Parliament, Bond Street, Chesterfield, L&M, Lark, and Philip Morris brands. In addition, the company owns various cigarette brands, such as Dji Sam Soe, Sampoerna A, and Sampoerna U in Indonesia; and Fortune and Jackpot in the Philippines. It markets and sells its products in the European Union, Eastern Europe, the Middle East, Africa, South and Southeast Asia, East Asia, Australia, Latin America, and Canada. Philip Morris International Inc. was incorporated in 1987 and is headquartered in New York, New York.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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