Summary
Philip Morris announced results that beat the expectations of analysts and clearly impressed the market.
I continue to remain concerned about declining cigarette shipments globally.
IQOS also saw declines in the third quarter 2018.
The decline in shipments of IQOS appears to be due to distributors resizing their inventories and may not be indicative of a trend.
The stock appears too richly valued to buy in right now.
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On Thursday, October 18, 2018, international tobacco titan Philip Morris International (PM) announced its third-quarter 2018 earnings results. Overall, these results beat the expectations of analysts on both the top- and bottom-lines. The market appeared pleased with these results too, sending the shares up in price on both Thursday and Friday. While there were indeed some very good items in the company's earnings report, we continue to see it suffering from some of the same problems that it has been suffering from for quite some time. The most notable of these is declining worldwide demand for tobacco products. This may ultimately begin to affect the company if it cannot gain more traction with its alternative products such as IQOS as there are certainly limits to how much price increases can maintain its revenues.
As my long-time readers are no doubt already well aware, it is my usual practice to share the highlights from a company's earnings report before delving into an analysis of its results. This is because these highlights provide background for the remainder of the article and serve as a framework for the resultant analysis. Therefore, here are the highlights from Philip Morris International's third-quarter 2018 earnings results:
