Philip Morris (NYSE: PM) reported its Q3 results last week, with revenues falling below and earnings beating our estimates. However, we believe PM stock has some room for growth, as discussed below. The company reported revenue of $9.1 billion, reflecting 14% growth from the prior year period and below our estimate of $9.3 billion street estimate. Its adjusted earnings of $1.67 per share were up 20% y-o-y and slightly above our estimated $1.65 figure. In this note, we discuss Philip Morris’ stock performance, key takeaways from its recent results, and valuation.
PM stock has seen little change, moving slightly from levels of $85 in early January 2021 to around $90 now, vs. an increase of about 15% for the S&P 500 over this roughly 3-year period. Overall, the performance of PM stock with respect to the index has been lackluster. Returns for the stock were 15% in 2021, 7% in 2022, and -10% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 11% in 2023 – indicating that PM underperformed the S&P in 2021 and 2023.
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