Core Viewpoint - Philip Morris International's stock has experienced a pullback despite strong performance, presenting a potential buying opportunity for investors [1][10]. Group 1: Financial Performance - In Q3, organic revenue rose 5.9% year-over-year to $10.8 billion, with adjusted earnings per share (EPS) climbing 17.3% to $2.24 [7]. - Traditional cigarette volumes fell by 3.2% to 157.9 billion units, but the company reported better-than-expected results in Turkey [6]. - Segment organic revenue increased by 1% to $6.4 billion, and gross profits rose 4.8% to $4.3 billion due to price hikes offsetting volume declines [6]. Group 2: Product Performance - Zyn, the company's nicotine pouch brand, saw U.S. shipments increase by 37% in Q3, with retail sales volumes soaring by 39% [3]. - The heated tobacco units (HTUs), including the Iqos system, experienced a 15.5% increase in sales volumes to 40.8 billion units [4]. - The e-vapor product, Veev, saw shipments surge 91% to 900 million units, maintaining the No.1 market share in eight countries [4]. Group 3: Guidance and Strategy - Management maintained its full-year guidance for organic revenue growth at 6% to 8% while slightly increasing the adjusted EPS forecast to $7.46 to $7.56 [9]. - The company invested approximately $100 million in promotions to boost Zyn volumes, which accounted for a single-digit percentage of shipments in the quarter [11][12]. - Zyn's promotional activity was previously low due to supply constraints, and the strategy aims to attract users of other nicotine products [12]. Group 4: Valuation - Philip Morris' stock is trading at a forward price-to-earnings (P/E) ratio of under 18, with a price/earnings-to-growth (PEG) ratio of under 0.7, indicating potential undervaluation [14]. - The forward yield is just below 4%, making it an attractive investment opportunity in the defensive growth stock category [14][15].

Core Viewpoint - Traditional cigarette sales are declining, but Philip Morris International is offsetting this with strong growth in its newer nicotine products, particularly the Zyn brand and heated tobacco units [1][10]. Group 1: Sales Performance - Zyn shipments in the U.S. increased by 40% to 190 million cans in Q2, with retail sales volumes growing by 26% in the quarter and 36% in June [1]. - Outside the U.S. and Nordic countries, Zyn shipments more than doubled, now available in 44 markets, with overall oral product shipments climbing 23.8% [2]. - Sales volumes of heated tobacco units (HTUs), including the Iqos system, rose nearly 9.2% to 38.8 billion units, with in-market sales increasing by 11.4% [4]. - E-vapor product Veev saw shipment growth more than double, driven by pod growth in Europe, now in 42 markets and holding the No. 1 market share in six European markets [5]. Group 2: Financial Metrics - Organic revenue rose 6.8% year over year to $10.1 billion, with adjusted earnings per share (EPS) climbing 20% to $1.91 [6]. - Traditional cigarette volumes fell by 1.5% to 155.2 billion units, but segment organic revenue grew 2% to $6 billion, and gross profits increased by 5% to $4 billion due to price hikes [5]. - Management maintained its full-year guidance for organic revenue growth at 6% to 8% while raising adjusted EPS guidance to $7.43 to $7.56 [9]. Group 3: Market Outlook - The company expects a 3% to 4% decline in traditional cigarette volumes due to supply chain issues in Turkey and competition from illicit cigarettes in Indonesia [7][8]. - Despite the forecast for steeper declines in cigarette sales volumes, the smoke-free portfolio, particularly Zyn and Iqos, continues to show strong growth and better unit economics [10][11]. - The stock is viewed as undervalued with a forward price-to-earnings (P/E) ratio under 22 and a PEG ratio below 0.35, indicating potential for growth [12]. Group 4: Investment Considerations - The current share price offers a forward dividend yield of 3.3%, which, while lower than some competitors, positions the company as a unique growth stock in a defensive industry [13]. - The dip in stock price presents a potential buying opportunity for long-term investors [13].

Core Insights - The article highlights the performance of dividend-paying stocks during market downturns, emphasizing their stability and ability to outperform the S&P 500 in 2025 [1][2] Group 1: AT&T - AT&T is a major U.S. telecom provider with 72.7 million post-paid phone subscribers and 9.3 million fiber optic broadband customers as of the end of 2024 [3] - The stock has a low beta of 0.42, indicating less volatility during market downturns, and offers a dividend yield of 4.1%, which is sustainable as it represents only half of the company's earnings-per-share estimate for 2025 [4] Group 2: Philip Morris International - Philip Morris is the largest tobacco company globally, selling products in 180 countries, and has a beta of 0.44, making it a reliable investment during economic downturns [5] - The company has consistently paid and raised its dividend since 2008, currently yielding 3.2%, and smoke-free products now account for 40% of total sales, indicating a shift towards long-term growth [6] Group 3: The Coca-Cola Company - Coca-Cola is a well-established blue-chip dividend stock with a diverse portfolio of beverages and a low beta of 0.45, making it a stable investment choice [7][8] - The company has a dividend yield of 2.8% and a payout ratio of 69% of 2025 earnings estimates, with a strong track record of increasing dividends over six decades [9]