As Smoking Becomes Less and Less Acceptable, These Companies Are Struggling to Adapt

As smoking in the United States and around the world becomes less and less favorable, companies such as Philip Morris International is finding the road to be a little more difficult to traverse that previous times. This is great example of how the changing times can make it difficult for a business to survive, especially with something such as this. However, the company is still putting up reliable numbers, but with something like this you can’t help but think it is only a matter of time before evolution shrinks this industry.

Published over a year ago
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Reviewed by Ellen Johnson

Taking a look at their full 2016 year numbers, we can gather a decent grasp of how the company has been doing. These numbers can be found on a recent 8-K report, along with their quarterly numbers. Reported diluted earnings per share of $4.48 is up $0.06 or 1.4% versus $4.42 in 2015. Net revenues, excluding excise taxes, came in at $26.7 billion, down 0.4% and the company increased the regular quarterly dividend by 2.0% to an annualized rate of $4.16 per common share. Solid numbers should keep most investors content, but not let us take a look at price movement and see how the stock has been.

The stock is certainly performing well as price is about to jump to new highs and it’s doing so with purpose. As you can see from the monthly time frame, price has pulled back but is exploding to the upside now. This could provide momentum to the upside that potential investors are looking for, or this could be a false breakout. Be sure to use the chart along side the fundamental research to formulate a well-rounded opinion.

Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Philip Morris income statement, its balance sheet, and the statement of cash flows. Potential Philip Morris investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Philip Morris investors may use each financial statement separately, they are all related. The changes in Philip Morris's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Philip Morris's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of Philip Morris fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Philip Morris performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Philip Morris shares is the value that is considered the true value of the share. If the intrinsic value of Philip is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Philip Morris. Please read more on our fundamental analysis page.

How effective is Philip Morris in utilizing its assets?

Philip Morris International reports assets on its Balance Sheet. It represents the amount of Philip resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, Philip Morris aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Tobacco space. To get a better handle on how balance sheet or income statements item affect Philip volatility, please check the breakdown of all its fundamentals.

Are Philip Morris Earnings Expected to grow?

The future earnings power of Philip Morris involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of Philip Morris factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. Philip Morris stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of Philip expected earnings.

And What about dividends?

A dividend is the distribution of a portion of Philip Morris earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. Philip Morris dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. Philip one year expected dividend income is about USD3.82 per share.
As of the 18th of March 2024, Dividends Paid is likely to drop to about 6.8 B. In addition to that, Dividend Yield is likely to drop to 0.04.
Last ReportedProjected for 2024
Dividends PaidB6.8 B
Dividend Yield 0.05  0.04 
Dividend Payout Ratio 1.02  0.67 
Dividend Paid And Capex Coverage Ratio 1.39  1.08 
Investing in dividend-paying stocks, such as Philip Morris International is one of the few strategies that are good for long-term investment. Ex-dividend dates are significant because investors in Philip Morris must own a stock before its ex-dividend date to receive its next dividend.
This type of analysis is very useful when you want to generate a past dividend schedule and payout information for Philip Morris. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.

Philip Morris Gross Profit

Philip Morris Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Philip Morris previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Philip Morris Gross Profit growth over the last 10 years. Please check Philip Morris' gross profit and other fundamental indicators for more details.

Breaking it down

Risks

Being in the smoking industry certainly has many risks that you should take into account, but for now, here are a couple to keep in mind before investing. The rest can be found in the latest 10-K report. First, there are many different governmental risks are new regulations may be put in place that could have an adverse affect on the company and sales. Secondly, as people begin to change their opinions and smoking is not as accepted as it once was, that could begin to affect sales which in turn affects the stock price. The new e-cig craze is something that could offset these types of risks.

Conclusion

These types of stock take careful consideration because there are many different pressures from governments to social acceptability. Of course if after your own research and data collecting you see it could be a good fit for your portfolio, then this is a solid company to invest in. Nothing stands out as a huge fundamental or technical red flag, but if you still have questions are need assistance, be sure to reach out to an investing professional and they can point you in the right direction.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of Philip Morris International. Please refer to our Terms of Use for any information regarding our disclosure principles.

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