Philip Morris: Remarkably Strong Q2 Excluding Currency & Russia
(Preview) Company Update (PM US) (Buy)
Summary
PM Q2 results were hit by the strong dollar and the loss of earnings from Russia and Ukraine, but were remarkably strong otherwise.
Pro forma, volume grew 3.0% year-on-year in Q2 despite supply chain constraints, and revenues grew 7.2% excluding currency.
There was good progress across Reduced Risk Products, and 2022 currency-neutral EPS growth outlook was raised to 10-12%.
PM shares are at 17.7x 2022 EPS and a Dividend Yield of 5.3%. Management's commitment to the dividend is "unwavering"
With PM at $93.59, we expect a standalone total return of 44% (12.2% annualized), more if the Swedish Match deal closes. Buy.
Introduction
Philip Morris International Inc. stock rose 4.2% on Thursday (July 21) after Q2 2022 results were released.
We initiated our Buy rating on PM in June 2019. Since then, shares have gained 39% (including dividends), though the share price has fallen 17% from its peak in mid-February, just before Russia invaded Ukraine.
Q2 2022 results reflect the exceptional one-of…