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Why Philip Morris (PM) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Philip Morris International (PM) are down 2.7% to $86.47 in early trading Thursday after it cut its earnings per share guidance to a range of $4.87 to $4.97 for the 2014 fiscal year from a previous range of $5.09 to $5.19.

The company said it's due to plant closures and the impact from currency exchange rates.

Philip Morris also projects total cigarette industry volume, excluding the United States and China, to decline by 2% to 3% in 2014, and said it is "cautiously optimistic" that in 2015 the decline will revert to the historical average of 1% to 2%.

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Separately, TheStreet Ratings team rates PHILIP MORRIS INTERNATIONAL as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate PHILIP MORRIS INTERNATIONAL (PM) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for PHILIP MORRIS INTERNATIONAL is rather high; currently it is at 68.41%. Regardless of PM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PM's net profit margin of 27.10% compares favorably to the industry average.
  • PM, with its decline in revenue, underperformed when compared the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 8.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • In its most recent trading session, PM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Tobacco industry. The net income has decreased by 11.8% when compared to the same quarter one year ago, dropping from $2,125.00 million to $1,875.00 million.
  • Net operating cash flow has decreased to $715.00 million or 47.54% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: PM Ratings Report
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