It has been about a month since the last earnings report for Philip Morris (PM). Shares have added about 11.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Philip Morris due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Philip Morris Q1 Earnings Beat Estimates, Revenues Up 9.1% Y/Y
Philip Morris reported first-quarter 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year.
Philip Morris posted quarterly adjusted earnings of $1.96 per share, which increased 16% year over year. Excluding currency effects, the adjusted earnings jumped 5.3% year over year. The bottom line beat the Zacks Consensus Estimate of $1.82.
Net revenues of $10,146 million increased 9.1% on a reported basis and 2.7% on an organic basis year over year. Revenues beat the Zacks Consensus Estimate of $9,826 million. The increase in organic revenues was backed by favorable pricing, led by international combustibles. This growth was partly offset by an unfavorable volume/mix, reflecting lower international combustibles and U.S. volumes, despite higher international smoke-free volumes.
PM’s Quarterly Performance: Key Metrics and Insights
Total shipment volumes decreased 1.9% to 184.3 billion units in the first quarter.
Adjusted gross profit increased 10.1% (up 3.8% on an organic basis) to $6,911 million, while operating income rose 9.8% (up 0.9% on an organic basis) to $3,893 million.
Decoding PM’s Segment Performance
Net revenues in the International Smoke-Free segment grew 24.7% (up 15.8% on an organic basis) to $3,836 million, driven by favorable volume/mix from higher HTU and e-vapor volumes, along with higher HTU pricing. Adjusted gross profit rose 28.6% (up 19.4% organically). Shipment volume grew 11.9% to 44.1 billion units, led by Italy, Global Travel Retail, Taiwan and Russia.
In the International Combustibles segment, net revenues increased 6.8% (up 1% organically) to $5,688 million, as favorable pricing and distribution-related impacts more than offset an unfavorable volume/mix. Adjusted gross profit increased 9.8% (up 3.9% organically). Shipment volume declined 5.1% to 137.3 billion units, with notable decreases in Indonesia, Russia, Germany and Mexico.
Revenues in the U.S. segment fell 30.8% (down 31.6% on an organic basis) to $622 million, reflecting lower ZYN volumes due to distributor and trade inventory movements, as well as an unfavorable pricing comparison from lower prior-year promotional activity. Adjusted gross profit decreased 44.1% organically. Shipment volume declined 21.2% to 2.8 billion units.
Philip Morris: Other Updates
The company ended the quarter with cash and cash equivalents of $5,450 million, long-term debt of $43,808 million and a total shareholder deficit of $7,300 million.
Sneak Peek Into PM’s Outlook
Adjusted EPS for 2026 is envisioned in the $8.36-$8.51 range, indicating 10.9-12.9% growth. Adjusted EPS, excluding currency, is likely to be in the $8.11-$8.26 band, indicating a year-over-year increase of 7.5-9.5%. For 2026, Philip Morris expects reported EPS in the band of $7.56-$7.71 compared with $7.26 in 2025.
The total international industry volume for cigarettes and HTUs (excluding China and the United States) is likely to decline nearly 2% in 2026. Total cigarette and SFP shipment volumes were broadly stable, supported by high-single-digit growth in SFP shipments, partly offset by an approximate 3% decline in cigarette shipments.
For 2026, PM expects net revenues to increase 5-7% on an organic basis. The operating income on an organic basis is likely to rise 7-9%.
Management expects an operating cash flow of around $13.5 billion in 2026. Capital expenditures are likely to be in the band of $1.4 billion to $1.6 billion, primarily implying investments to support the smoke-free business.
For the second quarter of 2026, adjusted EPS is projected in the range of $2.02 to $2.07.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Philip Morris has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Philip Morris has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Philip Morris International Inc. (PM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).