Why I’m bullish on Philip Morris International Inc. after 2017 results

I’m optimistic about the investment potential of Philip Morris International Inc. (NYSE:PM)

Philip Morris
Philip Morris

Philip Morris International Inc. (NYSE:PM) has released full year results for the 2017 financial year today. Its adjusted EPS was $4.93, which is 10% higher than the 2016 figure.

This was in spite of a decline in cigarette and heated tobacco shipment volumes, which were down 2.7%. This is a continuation of the trend which has been seen across the global tobacco market in recent years.

Philip Morris’ international market share was down 0.1 point to 28%. The company faced continued challenges in Russia and Saud Arabia, but its Q4 performance was relatively robust and showed that the company continues to have a dominant position in many of its key markets.

Encouragingly, the performance of the company’s flagship smoke-free product IQOS was positive in the majority of its launch geographies. This shows the promise which the product could have as the tobacco industry gradually evolves towards a smoke-free future. Due to this, the company will continue to invest in IQOS in 2018 and this is expected to drive further momentum.

Looking ahead to 2018, the company is forecasting a rise in EPS of 7% to 10% when favorable currency impacts are excluded. This would be a positive performance in my view at a time when the industry is undergoing a period of major change.

In the long run, I feel bullish about Philip Morris’ investment prospects. I think it has a strong position within the smoke-free product segment and is enjoying positive customer feedback in a number of key markets. This could set the foundation for growth in the long run.

Sure, in the short run there could be some disruption to the company’s overall performance from declining cigarette volumes. But with pricing power in a number of markets as well as long term growth potential from reduced risk products, the future for the business seems bright from an investment perspective.

About Robert Stephens 37 Articles
Robert Stephens is a CFA Charterholder and works as an Equity Analyst. He is a keen private investor and has bought and sold stocks for 15 years, investing in a range of sectors and markets. He has previously written for Seeking Alpha and The Motley Fool, and now runs his own business. If you would like to contact Robert, please email info@investorsquawk.com or contact him via one of the other methods on the 'Contact Us' page