Philip Morris: Put That in Your Pipe and Smoke It

Source: Thinkstock

Source: Thinkstock

Philip Morris (NYSE:PM) is a company that many are familiar with, but perhaps more so with its products. The stock has steadily risen over the years and yields over 4 percent. Recall that the company manufactures and sells cigarettes and other tobacco products. The company’s portfolio of brands include Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White. It also owns various cigarette brands, such as Sampoerna, Dji Sam Soe, and U Mild in Indonesia. It owns Fortune, Champion, and Hope in the Philippines, Diana in Italy, Optima and Apollo-Soyuz in Russia. Morven Gold in Pakistan, Boston in Colombia, as well as Belmont, Canadian Classics, and Number 7 in Canada.

The company sells its products in approximately 180 countries in the European Union, Eastern Europe, the Middle East, Africa, Asia, Latin America, and Canada. I recently wrote an article where I questioned whether Philip Morris stock was about to go up in smoke. The purpose of this article is to follow-up on that piece where I suggested the stock could be a buy on weakness if the company could deliver some surprise beats.

Well, Philip Morris crushed earnings, beating on the top and bottom lines. The company saw diluted earnings per share of $1.17, down by $0.13 or 10.0 percent versus $1.30 in 2013 but if we exclude unfavorable currency of $0.15, reported diluted earnings per share were actually up by $0.02 or 1.5 percent versus $1.30 in 2013. Adjusted diluted earnings per share of $1.41, up by $0.11 or 8.5 percent versus $1.30 in 2013. Further, these earnings beat consensus estimates by $0.17! if we exclude unfavorable currency of $0.15, adjusted diluted earnings per share were up by $0.26 or 20.0 percent versus $1.30 in 2013.