Philip Morris Stock Records 50% YTD Surge: Is it Too Late to Buy?

Core Insights - Philip Morris International Inc. (PM) has seen a stock increase of 50.1% year to date, outperforming the Zacks Tobacco industry's 38.8% rise and the 7% growth of the Zacks Consumer Staples sector, while the S&P 500 has only increased by 0.9% [1][2][9] Performance Comparison - PM has outperformed competitors such as Altria Group, British American Tobacco, and Turning Point Brands, which have seen returns of 13.4%, 27.1%, and 24.7% respectively year to date [2] Factors Behind Growth - The surge in PM's stock is attributed to premium pricing in traditional tobacco, rapid expansion in smoke-free offerings, and tight cost controls [5] - As of June 4, 2025, PM's stock closed at $180.66, just 1.8% below its 52-week high, indicating potential for further growth [6] - PM's stock is trading above both its 50-day and 200-day moving averages, reflecting sustained upward momentum and investor confidence [7] Smoke-Free Business Expansion - Smoke-free net revenues increased by 20.4% in Q1 2025, driven by the expansion of IQOS, ZYN, and VEEV [9][10] - IQOS, PM's flagship product, saw a 9.4% growth in HTU-adjusted IMS, particularly in Japan and Europe, while ZYN shipments surged 53% to 202 million cans [11][12] - PM is now active in 95 markets with smoke-free offerings, confirming the effectiveness of its multi-category strategy [12] Traditional Tobacco Performance - PM's combustible tobacco business remains resilient, with flat reported net revenues but a 3.8% increase on an organic basis in Q1 2025 [13] - The company's global brand portfolio, led by Marlboro, gained market share, increasing PM's total cigarette category share by 0.4 percentage points to 24.8% [13] Financial Outlook - PM expects total volume growth of 2% in 2025, marking its fifth consecutive year of positive volume growth, with smoke-free products projected to grow by 12-14% [14] - Management forecasts net revenue growth of 6-8% on an organic basis, with adjusted EPS for 2025 expected to be between $7.36 and $7.49, indicating 12-14% growth from the previous year [15] Earnings Estimates - The Zacks Consensus Estimate for PM's 2025 earnings suggests a year-over-year growth of 13.7%, with the same for 2026 indicating an 11.7% increase [18] - For Q2 2025, adjusted EPS is projected to be between $1.80 and $1.85, reflecting year-over-year growth [17] Valuation Insights - PM is currently trading at a forward P/E ratio of 23.04, significantly above the tobacco industry average of 15.49, indicating strong investor confidence in its growth trajectory [20] - Compared to peers, PM commands a premium valuation, reflecting a market perception of it as a growth-oriented company within the tobacco industry [21][22] Conclusion - PM is positioned as a leader in the shift toward reduced-risk products, with strong pricing power, accelerating smoke-free growth, and consistent earnings momentum, making it an attractive long-term investment opportunity [24][25]