Philip Morris earnings preview: Tobacco giant looks to extend long streak of EPS beats

Philip Morris International (NYSE:PM) will report earnings on February 8 before the market opens and hold a conference call with top management at 9:00 a.m. to discuss the outlook for the year. The tobacco company is expected to report revenue of $9.01B and EPS of $1.45 for the quarter. Philip Morris (PM) has a streak of 16 straight EPS beats and also topped revenue estimates in 13 of those quarters.

During the quarter, an increase in the adoption of smokeless products is expected to provide an offset to continued declines with traditional cigarette sales. Ahead of the report, Goldman Sachs analyst Bonnie Herzog said she expects Philip Morris to introduce attractive 2024 guidance. Looking to the regulatory roadmap for the year, the FDA has pushed back anticipated menthol cigarette regulations to March and announced its intent to provide more information to establish a maximum nicotine level in cigarettes in April. However, in an election year, those issues could kicked further down the road. Bank of America noted that the long-term prospects of the U.S. nicotine category. "Once final details are released, we expect manufacturers and other stakeholders to initiate litigation to prevent these rules from being implemented," updated analyst Lisa Lewandowski. That litigation is seen as likely delaying any such action by the FDA. The tobacco sector was jolted in December when British American Tobacco p.l.c (NYSE:BTI) slashed the value of some U.S. cigarette brands. Chief Executive Tadeu Marroco described the move as "accounting catching up with reality" as the brands are not expected to have indefinite value of about $80B on the balance sheet. British American Tobacco (BTI) took a $31.5B non-cash adjusting impairment charge to account for the new brand values.

Shares of Philip Morris International (PM) are down close to 3% on a year-to-date basis and also trade slightly below their 100-day and 200-day moving averages. The stock is well liked on Wall Street, with 13 Buy-equivalent or higher ratings stacking up against just 2 Hold-equivalent ratings and 2 Sell-equivalent ratings. The last seven articles from Seeking Alpha analysts on PMI have also been bullish. The dividend yield on PM for new buyers of the stock is currently at 5.67%.