Core Viewpoint - The market anticipates Philip Morris (PM) will report a year-over-year increase in earnings driven by higher revenues for the quarter ended December 2024, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The consensus EPS estimate for Philip Morris is $1.51 per share, reflecting an 11% increase year-over-year, while revenues are projected at $9.36 billion, a 3.5% increase from the previous year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 2.03%, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Philip Morris is lower than the consensus estimate, resulting in an Earnings ESP of -0.61%, complicating predictions for an earnings beat [10][11]. Historical Performance - In the last reported quarter, Philip Morris exceeded the expected earnings of $1.83 per share by delivering $1.91, resulting in a surprise of +4.37%. Over the last four quarters, the company has beaten consensus EPS estimates three times [12][13]. Market Reaction Factors - An earnings beat or miss may not solely dictate stock price movement, as other factors can influence investor sentiment. Stocks may decline despite an earnings beat or rise despite a miss [14][16]. Investment Considerations - While Philip Morris does not currently appear to be a strong candidate for an earnings beat, investors should consider other factors before making investment decisions [16].

Core Insights - Zyn, a nicotine pouch brand, has rapidly gained popularity in the U.S., benefiting Philip Morris International amid a long-term decline in cigarette smoking [1][3] - The FDA has authorized 20 Zyn products for marketing in the U.S., citing lower health risks compared to traditional cigarettes and most smokeless tobacco products [2] - Zyn's growth aligns with Philip Morris's strategy to shift towards smokeless products, aiming for two-thirds of revenue to come from smoke-free sources by 2030 [4] Company Developments - In 2022, Philip Morris International acquired Swedish Match, the manufacturer of Zyn, for $16 billion [2] - Zyn shipped 238 million cans in the U.S. in 2022, with projections indicating that this number will more than double in 2024 [3] - Philip Morris announced a $600 million investment to build a new Zyn production facility in Aurora, Colorado, followed by an additional $232 million investment to expand production in Owensboro, Kentucky [5]

Core Viewpoint - The current stock market is heavily focused on artificial intelligence, semiconductors, and cryptocurrency, suggesting a need for diversification in investment portfolios [1] Company Overview - Philip Morris International (PM) is a global leader in the nicotine market, with a dividend yield exceeding 4% and a strong balance sheet, positioning it for double-digit earnings per share (EPS) growth in the future [3][10] Market Position - Philip Morris International has a diverse portfolio of cigarette brands, including Marlboro and Chesterfield, and operates in nearly every country except China and the U.S. [4] - The company experienced a 1.3% year-over-year growth in cigarette volumes last quarter, contrasting with Altria Group's 8.6% decline [5] New Product Development - The company has invested significantly in the new-age nicotine market, acquiring leading products like the IQOS heat-not-burn device and Zyn nicotine pouches [6] - Smoke-free revenue grew by 16.8% year-over-year, now accounting for 38% of total revenue, indicating a strong growth trajectory for these products [7] Revenue Growth - Overall revenue for Philip Morris International increased by 11% year-over-year, despite a supply shortage of Zyn nicotine pouches, which affected market share [8] - Management anticipates that resolving the Zyn supply shortage will lead to accelerated revenue growth [9] Dividend and Cash Flow - The company currently pays a dividend of $5.25 per share, supported by $6.46 in free cash flow per share, indicating sustainable dividend growth potential [10] - Expectations for increasing free cash flow suggest that the company will have more capacity to raise dividends in the future, enhancing investor income [11] Investment Recommendation - With a strong market position in safer nicotine products and a solid dividend yield, Philip Morris International is recommended as a long-term investment during the transition from traditional cigarettes [12]

Investment Rating - The report assigns a "Buy" rating with a target price of $150.00, indicating a potential upside of 23.4% from the current price of $121.59 [4][5][139]. Core Insights - Philip Morris International (PMI) is transitioning towards a "smoke-free future" with a strong focus on reduced-risk products (RRPs) such as heated tobacco and nicotine pouches, which are expected to drive future growth [2][3][137]. - The company's flagship heated tobacco product, IQOS, has established a dominant market position globally, particularly in Japan and Europe, and is set to expand further into the U.S. market [2][3][137]. - PMI's revenue from RRPs has significantly increased, contributing approximately 35.6% to total revenue as of 2023, with expectations for continued growth [25][133][138]. Summary by Sections Company Overview - PMI is a leading global tobacco company with a strong market presence in approximately 175 countries, primarily known for its Marlboro brand [1][8]. - The company has shifted its strategy to focus on low-risk products in response to declining smoking rates and increasing health awareness [7][9]. Financial Performance - PMI's revenue for 2022 was $31.76 billion, with projections for 2024-2026 showing growth to $37.86 billion, $40.38 billion, and $43.08 billion respectively [6][141]. - The company reported a net profit of $9.05 billion in 2022, with forecasts indicating growth to $9.83 billion in 2024 and $11.61 billion by 2026 [6][141]. Product Development - PMI has successfully diversified its product portfolio to include a range of non-combustible products, with heated tobacco products and nicotine pouches gaining significant traction [3][25][138]. - The acquisition of Swedish Match and its ZYN brand has positioned PMI as a leader in the nicotine pouch market, with ZYN's sales volume increasing by 55.8% year-over-year [3][138][129]. Market Position - PMI holds a leading market share in the global tobacco industry, with a 28.3% share in the heated tobacco segment and a strong presence in both traditional and emerging markets [15][12]. - The company's IQOS brand commands a 71% market share in the heated tobacco category, reinforcing its competitive advantage [72][72]. Future Outlook - The report anticipates continued growth in PMI's RRP segment, particularly in the U.S. market, following the resolution of legal disputes and the expansion of its product offerings [137][138]. - PMI's commitment to innovation and market expansion is expected to enhance its revenue streams and shareholder returns in the coming years [138][139].

Core Insights - Philip Morris International Inc. is making significant progress towards a smoke-free future, supported by a strong pricing strategy, innovative smoke-free products, and disciplined cost-saving measures [1] Pricing Power Driving PM's Performance - The company's strong pricing power has been a crucial factor in driving revenue and operating income growth, with net revenues reaching $9,911 million, an increase of 8.4% on a reported basis and 11.6% on an organic basis in Q3 2024 [2] - The growth in organic revenues was primarily due to positive pricing variance and favorable volume/mix, particularly from increased smoke-free product volumes [2] PM's Smoke-Free Transformation in Full Swing - Smoke-free products accounted for 38% of the company's net revenues in Q3 2024, highlighting the success of the IQOS heat-not-burn device [3] - The company aims to generate over two-thirds of its revenues from smoke-free products by 2030 [3] Strategic Initiatives and Partnerships - Philip Morris became the majority owner of Swedish Match on November 11, 2022, which has performed well due to its ZYN product [4] - A long-term partnership with KT&G was established on January 30, 2023, to commercialize innovative smoke-free devices outside South Korea [4] - Smoke-free revenues for 2024 are projected to increase by double digits organically, nearing $15 billion [4] Focus on Cost-Saving Initiatives - The company has implemented significant cost-saving measures, achieving an organic adjusted operating margin expansion of 90 basis points in Q3 2024, driven by an 80-basis-point increase in gross margin [5] - Cumulative gross cost efficiencies reached $490 million year-to-date, with a target of $2 billion in savings by 2026 [5] Currency and Regulatory Challenges - Philip Morris' Q3 2024 performance was impacted by currency fluctuations, particularly with the Egyptian Pound and Argentine Peso, leading to a 6-cent currency impact on adjusted diluted EPS [6] - The company anticipates an ongoing unfavorable currency impact of 40 cents for the full year, alongside challenges from strict government regulations [6] Final Thoughts on PM Stock - The company's strong fundamentals and commitment to innovation position it well for sustained growth, despite challenges from regulatory restrictions and currency headwinds [7] - Philip Morris shares have increased by 11.7% over the past six months, outperforming the industry growth of 10.5% [8]

Group 1: Exxon Mobil - Exxon Mobil is a global leader in energy, benefiting from steady demand and robust cash flow, even in uncertain markets [2] - The company offers a strong dividend yield of 3.8%, providing an attractive income stream [2] - Currently, Exxon Mobil trades at 13.3x forward earnings, which is below its 10-year median of 17.7x [11] Group 2: Philip Morris International - Philip Morris is recognized as a consumer staple, with consistent demand for its products [3] - The company has a generous dividend yield of 4.4% and is trading at 19.1x forward earnings, slightly above its 10-year median of 16.5x [7] - Philip Morris's transition to smokeless products has reignited its growth trajectory, with EPS projected to increase by 8.3% this year and 10.6% next year [7] Group 3: AT&T - AT&T combines a reliable telecommunications business with a generous dividend yield of 4.9%, making it a strong defensive play [8] - The stock has recently reached new record highs after nearly seven years of zero stock appreciation [8] - AT&T is trading at a one-year forward earnings multiple of 10.4x, just above its 10-year median of 9.4x [9] Group 4: Market Context - The current market environment shows signs of increased volatility, prompting investors to consider more defensive stocks [4][10] - The Fed's recent adjustments in interest rate policy expectations have contributed to a rise in market volatility [10] - Despite the volatility, high-yield, steady-performing stocks like Exxon Mobil, Philip Morris, and AT&T can help maintain stability and income [9]

Company Overview - Philip Morris International Inc. is a multinational tobacco company with a market capitalization of $200 billion, making it the largest publicly traded tobacco company globally [2]. Financial Performance - The company offers a dividend yield of over 4%, indicating a strong return for investors [2]. Investment Strategy - The Value Portfolio focuses on building retirement portfolios through a fact-based research strategy, which includes thorough analysis of 10Ks, analyst commentary, market reports, and investor presentations [2].

Core Points - The Ministry of the Interior and Safety in Korea is collaborating with Philip Morris Korea to support households in crisis by including informative messages on product packaging [1][2] - The initiative aims to guide individuals facing social and economic difficulties to the Health and Welfare Counseling Center or local government offices for assistance [2] - This collaboration marks a first in the tobacco industry, following a previous agreement signed in July [2] Product Information - The products that will feature the informative messages include TEREA Purple Wave, TEREA Blue (Heated Tobacco Sticks), Marlboro Gold, and Marlboro Red (Regular Cigarettes) [3] - Starting January next year, the initiative will expand to include all 50 products from Philip Morris Korea [3] - Informative messages are also being broadcasted on digital advertising boards in 1,400 convenience stores nationwide to enhance consumer awareness [3] Statements from Officials - Koo Bon-geun, Head of the Smart Welfare Safety Community Promotion Team, emphasized the importance of publicity in addressing welfare blind spots and indicated plans for further cooperation with various companies [4] - A representative from Philip Morris Korea highlighted the significance of using their products to raise social awareness about crisis households and expressed commitment to supporting those in need [4]

Core Insights - The analysis focuses on Philip Morris International (NYSE: PM) and highlights the broader market's perceived overvaluation while still presenting compelling investment opportunities [1] Company Overview - Philip Morris International is positioned as a long-term investment opportunity, particularly for those seeking safe and growing dividends [1] - The company is part of a market that, despite being overvalued by conventional metrics, still offers potential for risk-adjusted returns [1] Analyst Background - The analyst has a decade of experience in investment banking, specializing in equity and real estate markets, with a focus on identifying long-only investment opportunities [1] - The analyst has a strong background in economics and applied mathematics, which supports their ability to analyze market trends and investment strategies [1] Investment Strategy - The investment strategy emphasizes correlation across asset classes and sectors, aiming to enhance portfolio performance [1] - The analyst's experience includes sourcing over $100 million in commercial real estate investments, indicating a robust understanding of investment dynamics [1]

Core Viewpoint - Philip Morris reported strong Q3 2024 earnings, with adjusted EPS of $1.91, a 14.4% year-over-year increase, exceeding estimates. The company anticipates continued growth in 2024, driven by pricing and volume improvements in both combustible and smoke-free products [2][12]. Financial Performance - Adjusted EPS for Q3 2024 was $1.91, up 14.4% year-over-year, and 18% excluding currency effects, beating the Zacks Consensus Estimate of $1.83 [2] - Net revenues reached $9,911 million, an increase of 8.4% on a reported basis and 11.6% organically, surpassing the Zacks Consensus Estimate of $9,571 million [2][3] - Adjusted operating income rose 11.2% to $4,153 million, with an adjusted operating margin of 41.9%, up 1.1 percentage points [5] Product Segmentation - Revenues from combustible products increased 5.2%, while smoke-free business revenues grew 14.2%, accounting for 38% of total revenues [4] - Total shipment volumes increased 2.9% to 203 billion units in Q3, with notable growth in smoke-free product volumes driven by IQOS and ZYN [4] Regional Performance - European region net revenues grew 8.7% organically to $4,121 million, with total shipment volumes increasing 2.5% [6] - SSEA, CIS & MEA regions saw a 12.1% organic revenue increase to $2,964 million, with shipment volumes rising 3.2% [6] - Americas region revenues surged 30.5% organically to $1,148 million, despite a 1.1% decline in total shipment volumes [7] Strategic Developments - Philip Morris announced the sale of its subsidiary Vectura Group Ltd. to Molex Asia Holdings Ltd., expected to conclude by the end of 2024 [8] - The company raised its quarterly dividend by 3.8% to $1.35 per share but will not engage in share repurchases in 2024 [11] Future Outlook - For 2024, adjusted EPS is projected in the range of $6.45-$6.51, indicating 7.3-8.3% growth, with net revenues expected to increase 9.5% organically [12][14] - Management anticipates operating cash flow of around $11 billion and capital expenditures of $1.4 billion, including investments in ZYN [14] - The total international industry volume for cigarettes and HTUs is expected to grow up to 1% in 2024, with Philip Morris projecting a 2-3% rise in its shipment volumes [13]