Philip Morris Stock Moves Into Buy Zone After Earnings Surprise

Shares of Philip Morris International (PM) jumped sharply this week after the company reported better-than-expected earnings. The double-digit move for Philip Morris stock was strong enough to help it break out of a cup base and surpass a 128.22 buy point.

The tobacco giant, famous for its Marlboro brand, reported earnings of $1.91 per share, easily beating analyst expectations of $1.81. Revenue also exceeded forecasts, coming in at $2.96 billion — a 6.7% increase from the year-earlier quarter.

Philip Morris also raised its 2024 earnings outlook, and now expects earnings of $6.45 to $6.51 a share, up from the prior range of $6.33 to $6.45.

Following the earnings report, shares surged more than 10%, a notable move for a typically defensive stock that offers dividends. The stock has been on an upward trend for some time, with shares nearly 40% higher year-to-date.

Philip Morris Stock: Growth In Smoke-Free Products

Investor enthusiasm is mounting for Philip Morris stock due to the significant growth in the company’s smoke-free product segment. The ZYN Nicotine Pouch saw year-over-year growth of 41.4%, and the company’s heated tobacco device, IQOS, also showed solid gains. Smoke-free products now account for 38% of the company’s revenue and 40% of gross profit.

The strong performance in smoke-free products came alongside better-than-expected results in the traditional combustible tobacco segment. Though seen as a laggard, the segment showed revenue growth. The company was able to pass on higher costs to consumers.

The jump in shares for Philip Morris stock has brought the dividend yield down to 4.1%, which is lower than many of the stocks featured in this column. However, the company remains a dividend powerhouse, having increased its dividend every year since 2008. Its compound annual growth rate is 7% over that period.

The company recently raised its quarterly dividend again in September, which now sits at $1.35 per share.

If it meets growth expectations, significant potential exists for further dividend increases. For conservative investors, Philip Morris stock is debt-rated A- by S&P Global, solidly within the investment-grade category.

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