Investment Rating - Industry rating is maintained as "Outperform the Market" [6] Core Viewpoints - The global oral tobacco market is experiencing rapid growth, with a projected market size of USD 11.232 billion in 2024, reflecting a year-on-year increase of 57.57%, and expected to reach USD 25.148 billion by 2028, with a CAGR of 22.32% from 2024 to 2028 [1] - The North American market is expected to reach USD 8.775 billion in 2024, with a year-on-year growth of 58.30%, and projected to grow to USD 19.449 billion by 2028, with a CAGR of 22.01% [1] - The European market is projected to reach USD 2.415 billion in 2024, with a year-on-year increase of 56.12%, and expected to grow to USD 5.608 billion by 2028, with a CAGR of 23.45% [1] - The top three companies in the oral tobacco retail market in 2024 are Philip Morris International, British American Tobacco, and Altria Group, holding market shares of 41.1%, 24.6%, and 13.8% respectively, totaling 79.5% of the market [1] Summary by Sections Market Growth - The oral tobacco market is expected to see significant growth in both established and emerging markets, with North America and Europe leading in growth rates [1] - Emerging markets in Asia and Africa are in the early stages but are anticipated to realize their market potential rapidly as the oral tobacco market develops [1] Company Performance - Philip Morris International's ZYN nicotine pouch sales are projected to reach 644 million boxes in 2024, a year-on-year increase of 52.93%, with U.S. sales at 581 million boxes, up 51.49% [2] - British American Tobacco's oral tobacco sales are expected to reach 8.3 billion pouches in 2024, with U.S. sales significantly increasing by 234% [2] Regulatory Developments - The FDA has authorized the sale of 20 ZYN nicotine pouch products, which are expected to catalyze market growth due to their lower harmful component levels compared to traditional tobacco products [3] - The approval of flavored products by the FDA is anticipated to further enhance market growth and expand the overall market potential [3] Industry Supply Chain - Jincheng Pharmaceutical is positioned as a key supplier in the nicotine market, with an increase in production capacity to 200 tons per year, which is expected to positively impact sales and market positioning [4] - The report suggests focusing on companies within the oral tobacco supply chain, including Jincheng Pharmaceutical and others in the vaping and tobacco supply sectors [4]

Core Insights - Philip Morris' Zyn US volumes for Q2 fell slightly below expectations, leading to a decline in stock price and presenting a potential buying opportunity [1] Company Performance - The underperformance of Zyn volumes in the US has been a significant factor affecting Philip Morris' stock [1] Investment Opportunity - The decline in stock price due to the Q2 results is viewed as an opportunity for investors to buy into Philip Morris [1]

Core Insights - Philip Morris International Inc. (PM) is experiencing significant growth in smoke-free products, which are becoming a crucial part of its long-term transformation strategy, potentially offsetting declines in traditional cigarette sales [1][3][4] Smoke-Free Product Performance - Smoke-free products, including IQOS, ZYN, and VEEV, saw a shipment volume increase of 11.8%, resulting in a 15.2% rise in net revenues and a 23.3% increase in gross profit year over year [1][8] - Smoke-free products now account for 41% of total revenues and 42% of gross profit, indicating a strong shift in the company's revenue structure [1][3] - Management anticipates smoke-free volumes to grow by 12-14% for the full year, while cigarette volumes are expected to decline by approximately 2% [2] Cigarette Sales Overview - Cigarette shipments decreased by 1.5% to 155.2 billion units, primarily due to weaknesses in markets like Turkey and Indonesia [2][8] - Despite the decline in shipment volumes, combustibles still generated $6 billion in quarterly revenues, reflecting a 2.1% year-over-year increase [2][8] Competitive Landscape - Altria Group, Inc. (MO) is focusing on its on! nicotine pouch brand, which saw a 26.5% increase in shipments to 52.1 million cans, capturing an 8.7% retail share in the U.S. oral tobacco market [5] - Turning Point Brands, Inc. (TPB) reported a nearly eightfold increase in Modern Oral sales to $30.1 million, raising its revenue target for 2025 to $100-$110 million [6] Financial Metrics - Philip Morris shares have increased by 6.1% over the past month, compared to an industry growth of 11.3% [7] - The company is trading at a forward price-to-earnings ratio of 20.7X, higher than the industry average of 15.69X [9] - The Zacks Consensus Estimate projects year-over-year earnings growth of 14.2% for 2025 and 11.9% for 2026 [10]

Company Overview - Philip Morris International (PM) is an American company with operational headquarters in Switzerland, originally founded in 1847 in London as a tobacco shop [1] Investment Philosophy - The company focuses on identifying undervalued and promising stocks, emphasizing a balance between risk and reward [1] - It is believed that the best investment ideas are often the simplest, with a contrarian approach being favored [1]

Industry Overview - The tobacco industry is undergoing significant transformation due to declining cigarette volumes, rising health awareness, and evolving regulatory frameworks [2] - Companies are competing not only on brand strength but also on their ability to innovate with alternatives like heated tobacco and nicotine pouches [2] Altria Group, Inc. (MO) - Altria's adjusted earnings per share (EPS) rose 8.3% year over year to $1.44 in Q2 2025, supported by higher pricing, cost efficiencies, and share repurchases [5] - Revenues net of excise taxes were $5.29 billion, indicating portfolio stability [5] - Management raised the lower end of its 2025 adjusted EPS guidance to $5.35-$5.45, reflecting a growth rate of 3% to 5% [5] - Shipments of the on! nicotine pouch brand increased by 26.5% to 52.1 million cans, capturing an 8.7% retail share of the U.S. oral tobacco market [6] - The smokeable products segment showed resilience with adjusted operating income rising 4.2% and margins expanding 290 basis points to 64.5% [7] - Marlboro maintained a 59.5% share in the premium category, highlighting brand strength [7] Philip Morris International Inc. (PM) - Philip Morris' smoke-free products accounted for 41% of total net revenues in Q2 2025, growing 15.2% year over year [10] - The traditional cigarette business remains resilient, with combustible net revenues growing 2.1% in Q2, driven by price increases [11] - Management lifted its full-year adjusted EPS guidance to $7.43-$7.56, indicating 13-15% growth [13] - The company achieved over $500 million in gross cost savings in H1 2025, aiming for $2 billion in efficiencies by 2026 [12] - Cigarette shipment volumes declined 1.5% year over year to 155.2 billion units in Q2, with a forecasted 2% decrease for the full year [14] Comparative Analysis - The Zacks Consensus Estimate for Altria's 2025 EPS is $5.39, implying a year-over-year increase of 5.3% [15] - Philip Morris' consensus estimate remains at $7.50, indicating growth of 14.2% for 2025 [15] - Altria stock advanced 15.2% in the past month, outperforming Philip Morris' 8.9% gain [16] - Altria trades at a forward P/E multiple of 12.29, while Philip Morris carries a premium multiple of 21.25 [16] Investment Outlook - Philip Morris is viewed as the stronger long-term investment due to its global scale and leadership in smoke-free innovation [19] - Altria remains attractive for income-oriented investors but is seen as less favorable for sustained growth compared to Philip Morris [19]

Investment Rating - The report maintains a "Weaker than Market" rating for the U.S. stock market [1] Core Insights - After a pullback, the U.S. stock market has shown significant recovery, with small-cap stocks outperforming [3] - The S&P 500 index increased by 0.3%, while the Nasdaq decreased by 0.6% [3] - Among 18 sectors, 12 experienced gains, with notable increases in banking (+3.2%), automotive (+2.9%), and energy (+2.8%) sectors [3] Price Trends - Small-cap value stocks (Russell 2000 Value) rose by 4.1%, outperforming small-cap growth (Russell 2000 Growth +2.6%) and large-cap value (Russell 1000 Value +1.7%) [3] - The report highlights that 18 sectors saw price increases, while 6 sectors faced declines, with the largest declines in food and staples retailing (-2.0%) and software and services (-1.9%) [3] Fund Flows - The estimated fund flow for S&P 500 constituents was +1.7 billion USD this week, a significant decrease from +75.8 billion USD the previous week [4] - Notable inflows were observed in automotive (+11.0 million USD), diversified financials (+4.6 million USD), and banking (+3.8 million USD) sectors [4] - Conversely, significant outflows were recorded in software and services (-29.9 million USD) and semiconductor products and equipment (-7.7 million USD) [4] Earnings Forecast - The report indicates a 0.3% upward revision in the 12-month forward EPS expectations for S&P 500 constituents, following a 0.2% increase the previous week [5] - 21 sectors saw upward revisions in earnings expectations, with the semiconductor sector leading with a +1.2% increase [5]

Core Viewpoint - Philip Morris International reported strong second-quarter earnings for 2025, with adjusted earnings per share (EPS) beating estimates, while net sales fell short of expectations. The company raised its full-year EPS guidance, indicating positive growth prospects despite some challenges in revenue generation [2][11]. Financial Performance - Adjusted EPS for Q2 2025 was $1.91, reflecting a year-over-year increase of 20.1%, and beating the Zacks Consensus Estimate of $1.85 [2][3]. - Net revenues reached $10,140 million, a 7.1% increase on a reported basis and 6.8% on an organic basis, although it missed the consensus estimate of $10,255 million [3][4]. - The adjusted operating income rose 16.1% to $4,246 million, driven by improved pricing and volume/mix, despite increased costs in marketing and administration [5]. Segment Performance - Revenues from smoke-free products increased by 15.2%, accounting for 41% of total revenues, with strong performance from IQOS and ZYN products [5][7]. - In the European region, net revenues grew 8.7% to $4,234 million, while the Americas saw a 12.7% increase to $1,272 million, primarily driven by nicotine pouches [7][8]. Future Outlook - For 2025, adjusted EPS is projected to be in the range of $7.43-$7.56, indicating a growth of 13-15% compared to previous estimates [11]. - The company expects net revenues to increase by 6-8% on an organic basis, with operating income anticipated to rise by 11-12.5% [12]. - Philip Morris forecasts a decline of nearly 1% in total international industry volume for cigarettes and heated tobacco units in 2025, with a projected increase in smoke-free product volumes [12]. Cash and Debt Position - The company ended the quarter with cash and cash equivalents of $4,138 million and long-term debt of $42,431 million, alongside a total shareholder deficit of $10,012 million [10].

Retirement is complicated, and you only get one chance to do it right. Don't miss out because you didn't know what was out there. The Retirement Forum provides actionable ideals, a high-yield, safe retirement portfolio, and macroeconomic outlooks, all to help you maximize your capital and your income. We search the entire market to help you maximize returns. Philip Morris (NYSE: PM ) is a more than $250 billion company, the largest publicly traded "sin" stock in the world. The company has dramatically outpe ...

Core Viewpoint - Philip Morris International Inc. is currently trading at a forward P/E multiple of 20.93X, which is significantly higher than the Zacks Tobacco industry average of 15.31X and the broader Consumer Staples sector average of 17.14X, raising questions about whether the growth justifies this premium [1][2][4]. Valuation and Performance - Philip Morris trades at a forward P/E of 20.93X, above industry and sector averages, indicating a premium valuation [7]. - Recent performance shows PM shares fell 6.4% over the past month, contrasting with gains in the Zacks Tobacco industry and the S&P 500, which advanced 0.6% and 2.5% respectively [5][4]. - Major competitors like Altria and British American Tobacco have lower forward P/E ratios of 12.12X and 11.88X, while Turning Point Brands trades at a higher multiple of 24.02X [4]. Revenue and Growth - Smoke-free products accounted for 41% of revenues in Q2, growing 15.2% year-over-year, driven by IQOS, ZYN, and VEEV [7][18]. - Despite volume declines in traditional cigarettes, PM's combustible net revenues grew 2.1% in Q2, supported by price increases [19]. - Management projects a 2% full-year decline in cigarette volume, with a sharper 3-4% drop expected in the second half [15]. Cost Efficiency and Earnings Guidance - The company achieved over $500 million in gross cost savings in the first half of the year and aims for $2 billion in efficiencies between 2024 and 2026 [20]. - Adjusted earnings per share for the last quarter were reported at $1.91, up 20% year-over-year, although impacted by currency volatility [17]. - Management raised its full-year adjusted EPS guidance to $7.43-$7.56, indicating 13-15% growth [21]. Market Sentiment and Estimates - The Zacks Consensus Estimate for earnings per share has seen upward revisions, with current estimates at $7.50 for the current year and $8.39 for the next year, reflecting year-over-year growth rates of 14.2% and 11.9% respectively [22]. - Despite challenges, the raised EPS outlook and upward estimate revisions indicate confidence in sustained earnings growth [24].

Key Takeaways The savings are making a visible impact on profitability. Philip Morris delivered an adjusted operating income margin expansion of 290 basis points in the first six months of 2025, including 250 basis points on an organic basis. In the second quarter, organic margin improvement accelerated to 300 basis points, up from 200 basis points in the first quarter, indicating strong operational execution. Philip Morris International Inc. ((PM) is halfway through the three-year cost-savings program and ...