Philip Morris Hits Record High with Strong Q1 Earnings

Philip Morris International's stock soars with a 40% rise in 2025 so far as revenue grows and EPS climbs 17%. Q1 shows solid demand for Zyn and IQOS, indicating potential for further growth moving forward. Investors ponder if the stock is still a buy at this level.

Date: 28-04-2025

AI Rating: 8

Company Performance Insights: Philip Morris International (PM) recently achieved an all-time high, demonstrating strong investor confidence fueled by impressive earnings results. In Q1, the company reported organic revenue growth of 10% year-over-year, alongside a significant increase in adjusted earnings per share (EPS) by 17% to $1.76. The company maintained its overall revenue guidance for the year, indicative of its stable growth trajectory.

The primary growth driver is the nicotine pouch, Zyn, which saw U.S. shipment volumes ballooning by 53%. This reflects a broader trend in consumer preference shifting towards smoke-free tobacco alternatives. The organic revenue for the smoke-free product segment surged by 20%, suggesting that Philip Morris is successfully transitioning into the growing market for non-combustible products.

Profit Margins and Future Outlook: Gross profits rose faster than revenue, climbing 16% organically with gross margins improving by 340 basis points year over year. This improvement is attributable to the higher margins associated with Zyn and IQOS compared to traditional cigarettes. This positions the company advantageously as it continues to increase capacity for growing demand.

Philip Morris holds a forward P/E ratio of 23 and a PEG ratio under 0.4, indicating that shares may still be undervalued considering the expected growth. Additionally, the expectation of further expansion in its new product categories, backed by solid market demand and a robust marketing push, will likely keep the growth momentum alive.

Based on these findings, Philip Morris exhibits an attractive investment opportunity with a defensive growth profile, particularly appealing in the current economic climate where consumers are gravitating towards healthier alternatives. Investors may find value in purchasing on dips, given the solid performance indicators and growth potential noted in the report.

Stocks: PM