Philip Morris Worldwide (PM 0.06%) shares hit an all-time excessive following its newest earnings outcomes. The inventory is now up practically 40% in 2025, as of this writing, and over 75% up to now 12 months. I personal the inventory and have written about it up to now, together with final April once I predicted that the inventory may quickly escape of its year-long buying and selling vary. Boy, has it ever.
With that stated, what traders actually wish to know now’s whether or not they can nonetheless purchase the inventory or if it is too late. Let’s take a more in-depth have a look at its first-quarter outcomes to search out out.
Robust quantity progress
Philip Morris’ largest progress driver continues to be Zyn. For these unfamiliar with Zyn, it’s a pouch manufactured from nicotine powder and flavoring as a substitute of tobacco, and it has taken the U.S. market by storm. It has develop into common amongst younger adults, workplace staff, and even girls who like its discreet use, flavors, and the excitement they get from the product.
In Q1, Zyn’s robust progress continued, with U.S. cargo volumes hovering 53% to 202 million cans. Worldwide volumes additionally rose 53%, or 182% excluding its established Nordic markets. General oral product shipments climbed 27%.
That stated, among the progress got here from retail stock restocking. On the retail stage, the corporate noticed stable off-take quantity progress for Zyn of round 15%. It expects this progress to progressively speed up within the coming months as in-store availability improves and it will increase its advertising efforts. On account of its stable outcomes, it now expects U.S. ZYN shipments to be between 800 million and 840 million cans, up from a previous outlook of between 780 million and 820 million cans.
Picture supply: Getty Photos.
Zyn was not the corporate’s solely robust performer within the quarter. Heated tobacco models (HTUs) volumes, together with the IQOS system, jumped practically 12% to 37.1 billion models. The corporate stated in-market gross sales (these to finish customers) rose 9% in Japan and greater than 7% in Europe. It additionally famous robust progress coming from cities exterior of Japan and Europe, together with Jakarta, Seoul, and Mexico Metropolis. Philip Morris additionally noticed cargo progress greater than double for its e-vapor product, VEEV, led by pod progress in Europe.
Conventional cigarette volumes, in the meantime, stay regular, rising 1.1% to 144.8 billion models. Its market share, excluding the U.S. and China, rose 0.2% to 23%, or by 0.4% to 24.8% when together with HTUs.
General, natural income, which excludes forex results, acquisitions, and inclinations, rose 10% 12 months over 12 months to $9.3 billion. Adjusted earnings per share (EPS) climbed 17% to $1.76.
On an natural foundation, flamable tobacco income rose 4%, pushed by worth will increase and modestly rising volumes. The smoke-free enterprise noticed natural income surge 20%.
| Oral Merchandise (Zyn) | HTUs | Cigarettes | Smoke-Free | Whole | |
|---|---|---|---|---|---|
| Quantity progress | 27.2% | 11.9% | 1.1% | N/A | 3.9% |
| Natural income progress | N/A | N/A | 3.8% | 20.4% | 10.2% |
HTUs = heated tobacco models.
Gross earnings grew sooner than income, rising 16% organically, as each Zyn and IQOS have increased gross margins than the corporate’s conventional cigarette enterprise. Gross margins rose 340 foundation factors 12 months over 12 months on an natural foundation. The corporate additionally famous that gross margins improved for all three of its smoke-free classes, helped by worth will increase for Zyn and IQOS.
Trying forward, Philip Morris largely maintained its full-year outlook, making only a slight adjustment to its adjusted EPS forecast resulting from forex.
| Steering | |
|---|---|
| Natural income progress | 6% to eight% |
| Adjusted EPS | $7.01 to $7.14 |
| Adjusted EPS progress, excluding forex | 10.5% to 12.5% |
| Quantity progress | 2% |
Knowledge supply: Philip Morris Worldwide. EPS = earnings per share.
Is it too late to purchase Philip Morris inventory?
Philip Morris continues to see robust progress led by Zyn and IQOS. Each merchandise are rising properly, they usually each have higher unit economics than Philip Morris’ conventional cigarette enterprise. That stated, its conventional cigarette enterprise additionally stays stable, with modest quantity progress and powerful pricing energy. This can be a a lot completely different image from corporations that promote cigarettes within the U.S.
Zyn and IQOS additionally proceed to have stable enlargement alternatives forward. The corporate continues to be rising capability within the U.S. to maintain up with Zyn demand, whereas it’s simply beginning to develop internationally exterior its established Nordic markets. In the meantime, after shopping for again the U.S. rights to IQOS, Philip Morris has simply began testing IQOS in Austin, Texas. It hopes to develop to different take a look at markets after which later do a full launch when its new IQOS ILUMA gadget receives FDA approval.
From a valuation standpoint, the inventory trades at a ahead price-to-earnings (P/E) ratio of 23 occasions, based mostly on the analyst consensus for 2025, with a PEG (worth/earnings-to-growth) ratio of beneath 0.4. Shares with PEG ratios beneath 1 are sometimes thought of undervalued, so based mostly on this metric, the inventory continues to be low cost.
General, Philip Morris is a progress inventory in a defensive trade, with a horny 3.2% ahead dividend yield. It has stable progress alternatives forward, and it’s fairly tariff resilient, provided that it tends to make use of native manufacturing. As such, I feel traders can nonetheless look to purchase the inventory, particularly on any future dips.
