Philip Morris (PM) Gains But Lags Market: What You Should Know

This story originally appeared on Zacks

In the last trading session, Philip Morris (PM) closed at $90.04, recording a move of +0.6% from the previous day. The move lagged the S&P 500’s daily gains by 0.96%. Elsewhere, the Dow Jones rose 0.61%, while the big tech Nasdaq lost 0.04%.

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Ahead of today’s trading, shares of Marlboro seller and other cigarette brands have lost 5.79% over the past month. This lagged the consumer goods sector’s loss by 1.34% and the S&P 500’s loss by 0.21% in that time.

Philip Morris will look to show strength as it nears its next earnings release. On that day, Philip Morris is expected to report earnings of $1.32 per share, representing annual growth of 4.76%. Our latest consensus estimate calls for quarterly revenue of $7.84 billion, an increase of 5.26% over the same period last year.

Looking at the full year, our Zacks Consensus estimates that analysts expect earnings of $6.02 per share and revenue of $31.27 billion. These totals will indicate changes of +16.44% and +8.98%, respectively, from last year.

It’s also important to note recent changes in analyst estimates for Philip Morris. These reviews usually reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive rating reviews as a good sign of the company’s business outlook.

Research indicates that these discretionary revisions are directly related to the stock’s near-term price momentum. To take advantage of this, we have developed Zacks Rank, a proprietary model that takes these discretionary changes into account and provides an actionable ranking system.

The Zacks Rank system ranges from #1 (strong buy) to #5 (strong sell). It has a proven track record of success, subject to external scrutiny, with the #1 stock having averaged a +25% annual return since 1988. Zacks Consensus EPS estimate is down 0.69% over the past month. Philip Morris is currently rated by Zacks No. 3 (Hold).

Looking at the valuation, Philip Morris currently has a forward P/E ratio of 14.87. This valuation represents a premium over the industry’s forward P/E average of 10.12.

Investors should also note that PM has a PEG ratio of 1.9 at the moment. This metric is used similarly to the popular P/E ratio, but the PEG ratio also takes into account the expected earnings growth rate for the stock. The industry average price-expense ratio in PM was 1.9 as of yesterday’s close.

The tobacco industry is part of the consumer goods sector. This group has a Zacks Industry 200 rating, placing it in the bottom 22% of all 250+ industries.

The Zacks Industry Ranking measures the strength of our individual industry groups by measuring the average Zacks rating of the individual stocks within the groups. Our research shows that industries ranked 50% outperform the bottom half by a factor of 2 to 1.

You can find more information about all of these metrics and more at Zacks.com.

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