Financial Performance - Net revenues for the nine months ended September 30, 2025, reached $30.3 billion, an increase of $2.1 billion or 7.5% compared to the same period in 2024[296]. - Diluted earnings per share (EPS) for the nine months ended September 30, 2025, was $5.89, reflecting a 20.4% increase from $4.89 in the same period of 2024[301]. - Operating income for the nine months ended September 30, 2025, was $11,519 million, up from $10,143 million in 2024, reflecting a 13.6% increase[335]. - Net revenues for Q3 2025 reached $10.8 billion, an increase of $0.9 billion or 9.4% compared to Q3 2024, driven by higher combustible tobacco pricing and increased smoke-free product volumes[315]. - The diluted EPS for Q3 2025 was $2.23, representing a 13.2% increase from $1.97 in Q3 2024, with operational improvements contributing $0.21 to the EPS growth[321]. - Net earnings attributable to PMI for the nine months increased by 20.6% to $9.2 billion, with basic and diluted EPS rising by 20.4% to $5.90 and $5.89 respectively[368]. Revenue Drivers - The increase in net revenues was driven by favorable pricing variance due to higher combustible tobacco pricing and higher smoke-free products volume, despite lower cigarette volumes[298]. - Smoke-free product revenues grew by 16.0% to $12,500 million for the nine months ended September 30, 2025, compared to $10,773 million in 2024[336]. - Total combustible tobacco revenues increased by 2.2% to $17,786 million for the nine months ended September 30, 2025, compared to $17,399 million in 2024[336]. - The favorable pricing and volume/mix in the Europe segment were partly offset by increased marketing, administration, and research costs[318]. Market and Product Insights - As of October 2025, smoke-free products were available for sale in 100 markets, with IQOS, ZYN, and VEEV being the leading brands in the smoke-free products portfolio[286]. - The company’s net revenues from the SSEA, CIS & MEA region reached $8,942 million for the nine months ended September 30, 2025, up from $8,393 million in 2024, reflecting a 6.5% increase[335]. - The total shipment volume for the nine months ended September 30, 2025, was 592.7 billion equivalent units, representing a 1.8% increase compared to the same period in 2024[357]. - The total shipment volume of oral products reached 939.5 million cans for the nine months ended September 30, 2025, a 25.8% increase from 747.0 million cans in 2024[343]. Organizational Changes - The company plans to implement a new organizational model effective January 1, 2026, transitioning from four geographic segments to three new segments: International Smoke-Free, International Combustibles, and U.S.[283]. - The acquisition of Swedish Match AB in 2022 was a key milestone in the company's transformation towards becoming a smoke-free company, enhancing its oral nicotine product portfolio[289]. Impairments and Charges - The company recorded pre-tax restructuring charges of $243 million for the nine months ended September 30, 2025, related to the cessation of combustible tobacco production in two factories in Germany[301]. - The company recorded a goodwill impairment charge of $41 million during the second quarter of 2025, primarily due to a decline in estimated fair value of a reporting unit in the Europe segment[302]. - In Q3 2025, PMI recorded a non-cash after-tax impairment charge of $146 million, resulting in a diluted EPS charge of $0.09 per share, due to a reassessment of an equity investment in the Wellness & Healthcare business[310]. Future Outlook - For the full year 2025, the company expects total cigarette and smoke-free product shipment volume growth of around 1%, with smoke-free product volume growth projected at 12% to 14%[360]. - The estimated international industry volume decline for cigarettes and heated tobacco units (HTUs) is around 1% for 2025, excluding China and the U.S.[356]. - The company expects negligible revenue from cannabinoids in the near to medium term, despite ongoing development in the Wellness and Healthcare business[288]. Regulatory Environment - Legislative and regulatory challenges, including high excise taxes and restrictions on SFPs, are expected to impact PMI's profitability and market access[461]. - The EU is revising its Tobacco Excise Directive to include smoke-free products, with an implementation date proposed for January 1, 2028[476].

Investment Rating - The report assigns an "Overweight" rating for the new tobacco industry, particularly focusing on the new oral nicotine pouch segment [3]. Core Insights - The industry is experiencing clear trends driven by supply-demand dynamics, leading to accelerated growth in the new tobacco sector, with international tobacco giants increasing their investments [2]. - New oral nicotine products, which combine characteristics of heated non-combustible and vaporized electronic cigarettes, are gaining popularity due to their flavor variety and convenience, presenting a significant market opportunity [3][58]. - The report highlights that the new oral nicotine segment is expected to have the highest gross margins among new tobacco products, making it an attractive area for investment [3]. Summary by Sections 1. Oral Tobacco Industry - The global penetration rate for oral tobacco is currently at 1%, with a projected CAGR of 27% from 2023 to 2028, indicating strong growth potential [18][58]. - New oral nicotine products are expected to grow at a CAGR of 35% during the same period, with the market size reaching €15 billion by 2028 [18]. 2. Traditional Oral Tobacco - Traditional oral tobacco products have a focused audience and are primarily used in specific scenarios, with historical roots in Sweden and North America [54]. 3. New Oral Tobacco - The introduction of nicotine pouches, such as ZYN by Swedish Match, has marked the beginning of a new market segment, with significant growth observed in the U.S. market [58]. - The new oral tobacco products are characterized by their non-tobacco composition, lower health risks, and a variety of flavors, which cater to diverse consumer preferences [58][61]. 4. Industry Leaders - **Philip Morris International (PMI)**: After acquiring Swedish Match for $16 billion, PMI has established itself as a global leader in the new oral tobacco market, with a market share of 42% [76][78]. - **Altria**: Focused on the U.S. market, Altria's new oral tobacco brand "On!" has seen a CAGR of 49% from 2021 to 2024 [81]. - **British American Tobacco (BAT)**: Concentrating on the European market, BAT holds a significant share in the new oral tobacco segment, particularly in six core markets [84]. - **Haypp Group**: A leading online sales platform for nicotine pouches, Haypp is expected to achieve a revenue of 5 billion Swedish Krona in 2025, reflecting the industry's high growth potential [90][93]. 5. Valuation Review - The new oral tobacco segment is becoming a crucial valuation driver for companies in the tobacco industry, with significant investments and acquisitions indicating strong future prospects [3][22].

Group 1 - The core viewpoint is that Philip Morris International Inc. (NYSE: PM) is considered a long-term Buy despite potential short-term pullbacks [1] - The article references the author's previous analysis from July, indicating a consistent positive outlook on the stock [1] Group 2 - The author, Manika, is a macroeconomist with over 20 years of experience in investment management, stock broking, and investment banking [1] - Manika runs a profile called Long Term Tips (LTT), focusing on generational opportunities in the green economy [1] - The investing group Green Growth Giants delves deeper into opportunities within the green economy segment [1]

When I last wrote about the tobacco stock Philip Morris International Inc. (NYSE: PM ) in July, it was clear that the stock was a long-term Buy, even as a short-term pullback was on theManika is a macroeconomist with over 20 years of experience in industries including investment management, stock broking, investment banking. She also runs the profile Long Term Tips [LTT], which focuses on the generational opportunity in the green economy. Her investing group, Green Growth Giants , takes the theme a step fur ...

Core Insights - Philip Morris International Inc. reported strong third-quarter 2025 results, with both revenue and earnings exceeding expectations and showing year-over-year growth [1][2][9] Financial Performance - Adjusted earnings for the quarter were $2.24, reflecting a 17.3% increase year over year, surpassing the Zacks Consensus Estimate of $2.10 [2][9] - Net revenues reached $10,845 million, a 9.4% increase on a reported basis and 5.9% on an organic basis, exceeding the Zacks Consensus Estimate of $10,704 million [3][9] - The smoke-free business contributed significantly, with revenues increasing 17.7% and accounting for 41% of total revenues [4][9] Segment Performance - Revenues from combustible products grew 4.3% year over year, driven by high single-digit pricing, despite expected volume declines [4] - Total shipment volumes increased by 0.7% to 204.9 billion units [5] Regional Performance - In Europe, net revenues grew 12.4% to $4,719 million, supported by positive pricing and volume/mix, despite lower cigarette volumes [6] - The SSEA, CIS & MEA regions saw a 10.4% increase in net revenues to $3,273 million, primarily due to favorable pricing [7] - The EA, AU & PMI GTR regions also experienced a 10.4% revenue growth to $1,768 million, driven by favorable volume/mix [8] - Revenues in the Americas declined by 5.5% to $1,085 million, mainly due to unfavorable price variance [8] Future Outlook - For 2025, adjusted EPS is projected in the range of $7.46-$7.56, indicating a growth of 13.5-15.1% [11] - The company expects net revenues to increase by 6-8% on an organic basis and operating income to rise by 10-11.5% [13] - Capital expenditures are anticipated to be nearly $1.6 billion, primarily for smoke-free business investments [13] Other Updates - The company ended the quarter with cash and cash equivalents of $4,037 million and announced an 8.9% increase in its quarterly dividend to $1.47 per share [10]

Core Insights - Philip Morris International (PM) reported third-quarter 2025 results that exceeded Zacks Consensus Estimates for both revenue and earnings, reflecting strong growth prospects despite a recent stock correction [1][2] Financial Performance - Adjusted earnings per share (EPS) for Q3 2025 was $2.24, a 17.3% increase year-over-year, surpassing the Zacks Consensus Estimate by 6.67% [3] - Net revenues reached $10.8 billion, marking a 9.4% increase on a reported basis and 5.9% on an organic basis compared to the same quarter last year, with a positive surprise of 1.32% against the consensus estimate of $10.7 billion [4] - Operating income for the quarter was $4.3 billion, reflecting a substantial increase of 16.7% from the previous year [4] Product Shipment and Growth - Total shipment volume of cigarettes and smoke-free products grew by 0.7% year-over-year to 204.9 billion units, driven by a 91.0% increase in E-vapor shipments and a 16.9% rise in Oral smoke-free products [5] - The smoke-free business accounted for 41% of total net revenues, up 2.9 percentage points from the previous year, with a year-over-year growth of 17.7% in its top line and a 19.5% increase in gross profits [6] Future Guidance - For 2025, PM anticipates adjusted EPS in the range of $7.46-$7.56, indicating a growth of 13.5-15.1% from the previous year [7] - The company expects net revenues to increase by 6-8% on an organic basis and operating income to grow by 10-11.5%, alongside a projected smoke-free product volume growth of 12% to 14% [8]

Core Insights - The focus is on analyzing undervalued and disliked companies or industries with strong fundamentals and good cash flows, particularly in sectors like Oil & Gas and consumer goods [1] - Energy Transfer is highlighted as a company that was previously overlooked but now shows potential for substantial returns [1] - The approach emphasizes long-term value investing while also considering deal arbitrage opportunities in various sectors [1] Company Analysis - Energy Transfer is identified as a company that has been undervalued and is now seen as a strong investment opportunity [1] - The analyst expresses a preference for companies with understandable business models, avoiding high-tech and certain consumer goods sectors [1] Investment Philosophy - The investment strategy prioritizes long-term value while occasionally exploring short-term arbitrage opportunities [1] - There is a clear skepticism towards cryptocurrencies, indicating a preference for traditional investment avenues [1]

Core Insights - Philip Morris International Inc. has been under observation due to its comparable operations with Altria, particularly after the release of its Q3 earnings [1] Company Analysis - The company is recognized for its strong fundamentals and good cash flows, making it an attractive option for long-term value investing [1] - There is a focus on undervalued and disliked companies or industries, which could offer substantial returns [1] Investment Strategy - The investment approach emphasizes long-term value while also considering potential deal arbitrage opportunities in various sectors [1] - The analyst expresses a preference for sectors such as Oil & Gas and consumer goods, while avoiding high-tech and certain consumer goods like fashion [1]

Earnings Overview - Earnings season is gaining momentum with major companies like Tesla, Netflix, General Motors, and Ford reporting results this week [1][3] - As of October 17, 12% of S&P 500 companies have reported results, with analysts expecting an 8.5% increase in earnings per share for Q3, marking the ninth consecutive quarter of positive earnings growth but a slowdown from the 12% growth in Q2 [1][2] Sector Performance - A diverse range of sectors is represented in the earnings reports, including airlines, toy manufacturers, and telecom providers, with consumer spending updates expected from companies like Procter & Gamble and Deckers Outdoors [4] - Companies such as GE Vernova reported a 55% increase in orders to $14.6 billion, driven by its power and electrification equipment division, despite profits being below expectations [8][9] Company-Specific Highlights - Hilton reported adjusted earnings of $2.11 per share, exceeding expectations, while revenue per available room (RevPAR) declined 1.1% year-over-year [11][12] - AT&T surpassed subscriber estimates due to strong demand for bundled services and iPhone promotions, leading to a nearly 2% rise in stock [13][14] - Intuitive Surgical's stock surged 15% after beating earnings estimates, driven by strong demand for surgical robots [15] - Texas Instruments' stock fell 7% following a weaker-than-expected Q4 outlook, with projected sales of $4.22 billion to $4.58 billion [16][17] - Capital One reported a 23% increase in total net revenue to $15.4 billion, with earnings per share of $4.83, surpassing expectations [19][20] - Philip Morris experienced an 8% drop in stock after reporting a 3.2% decline in cigarette shipments, although smokeless product shipments increased by 16.6% [21][22][23] - 3M raised its annual earnings outlook after reporting sales of $6.3 billion, slightly above estimates, with adjusted earnings per share of $2.19 [24][25] - Halliburton's stock rose over 5% after reporting adjusted earnings of $0.58 per share, exceeding estimates despite a revenue decline to $5.6 billion [26][27] - GE Aerospace's stock increased over 2.5% after reporting a 26% revenue growth to $11.3 billion and raising its full-year EPS forecast [30][31] Market Sentiment - Bank of America noted that 76% of S&P 500 companies reporting so far have exceeded earnings expectations, indicating a stronger-than-usual earnings season [42][43] - Ally Financial reported better-than-expected consumer health, with earnings per share of $1.18, surpassing estimates [45][46]

Core Insights - Philip Morris International Inc. (NYSE:PM) is recognized as a strong investment opportunity, particularly for income investors due to its consistent dividend growth and solid financial performance [2][6]. Financial Performance - Stifel reaffirmed a Buy rating on Philip Morris after the company reported strong Q3 results, exceeding expectations in organic sales, profit margins, and earnings per share (EPS) growth [2]. - The company raised the lower end of its 2025 EPS forecast, aided by a reduced tax rate and lower interest expenses, but lowered its operating profit guidance to 10%-11.5% from 11%-12.5% due to increased investments in the U.S. market, particularly for its ZYN nicotine pouch brand [3]. - For Q4, Philip Morris anticipates low to mid-single-digit operating profit growth, slightly below earlier projections, primarily due to inventory challenges with its IQOS and ZYN product lines, estimating a 20-30 million can inventory headwind for ZYN [4]. Stock Performance and Market Sentiment - Despite a nearly 18% decline from its June peak, Stifel views this drop as a buying opportunity, asserting that the expected Q4 softness does not reflect the company's underlying earnings momentum [5]. - The company is projected to achieve EPS growth consistent with its medium-term target range of 9-11% heading into 2026 [5]. Dividend Information - Philip Morris has a strong track record of rewarding shareholders with growing dividends for 16 consecutive years, currently offering a quarterly dividend of $1.47 per share and a dividend yield of 3.87% as of October 21 [6].