Can Philip Morris (PM) Surprise This Earnings Season? - Analyst Blog

Philip Morris International Inc. PM is set to report first-quarter fiscal 2014 results on Apr 17. Last quarter, the company delivered in-line results. Let us see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Philip Morris International has been reporting decent earnings results for the past few quarters backed by positive pricing. Its impressive brand portfolio of tobacco and wine products helps it to maintain a strong business momentum.

However, unfavorable currency translations have been hurting the company's top line negatively for the past few quarters. Management expects higher currency headwinds in 2014.

Cigarette shipment volumes are being affected negatively for the past few quarters as there is a general shift of demand away from conventional tobacco consumption to alternative less harmful tobacco products.

This is due to the difficult industrial conditions in the tobacco industry due to declining demand resulting from the ongoing anti-tobacco campaigns. Governments around the world are hiking excise taxes on cigarettes and imposing packaging and advertising restrictions on cigarette makers.

In Nov 2013, Philip Morris International announced that it is going to foray into the e-cigarette category. However, probable ban on e-cigarettes by the U.S. Food and Drug Administration may affect e-cigarette sales in the coming quarter.

Earnings Whispers?

Our proven model does not conclusively show that Philip Morris International is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimate. However, that is not the case here due to the following factors:

Zacks ESP: ESP for Philip Morris is 0.00%.

Zacks Rank: Philip Morris has a Zacks Rank #4 (Sell). We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies that investors may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Coca Cola Enterprises Inc. CCE, with Earnings ESP of +2.27% and a Zacks Rank #2 (Buy).

Cheesecake Factory CAKE, with Earnings ESP of +4.08% and a Zacks Rank #3 (Hold).

Hyatt Hotels Corporation H, with Earnings ESP of +9.09% and a Zacks Rank #3.