News

Shares of Philip Morris International (NYSE: PM) were moving higher today after the international tobacco giant posted strong results in its first-quarter earnings report, driven by growth in its IQOS heated tobacco sticks.

The stock closed up 3.8% on the news.

IQOS is heating up Philip Morris' stock

Philip Morris continued to make progress toward smoke-free products making a majority of its revenue as they represented 39% of revenue in the first quarter. IQOS, its heated tobacco stick product leading its transition to its smoke-free future, reported better than 10% market share in Europe for the first time, and IQOS's market share gained more than 3 percentage points of share in Japan to reach 29%.

The company reported 20.9% in heated tobacco unit shipment volume to 33.1 billion, while cigarettes were down just 0.4% to 143.2 billion. Total shipment volume, including oral products, was up 3.6% to 180.5 billion, a bullish sign for future growth.

Overall revenue jumped 9.7% to $8.8 billion, with organic revenue, which excludes divestitures, acquisitions, and currency exchange, up 11%. That result beat analyst estimates at $8.47 billion.

Further down the income statement, gross margin improved thanks to price hikes and a higher-margin profile of smoke-free products. Adjusted earnings per share jumped 8.7% to $1.50, which topped expectations at $1.41. In constant currency, adjusted earnings per share (EPS) was up 23% to $1.70.

CEO Jacek Olczak said, "Strong smoke-free momentum continues with rapid underlying volume progression and accelerating organic net revenue and gross profit growth."

What's next for Philip Morris

Looking ahead, management continued to expect strong growth in the heated tobacco category, forecasting 14%-16% growth and overall organic revenue growth of 7%-8.5%. On the bottom line, the company called for adjusted EPS of $6.55-$6.67, excluding currency, up 9%-11% and ahead of the consensus at $6.37.

The results should give investors confidence that its IQOS strategy is paying off. Philip Morris stock continues to look like a good value, especially when factoring in its 5.5% dividend yield.

Should you invest $1,000 in Philip Morris International right now?

Before you buy stock in Philip Morris International, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Philip Morris International wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

*Stock Advisor returns as of April 22, 2024

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.