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TheStreet Open House

How Will Philip Morris (PM) Stock React To Possible Lawsuit In U.K. Over Cigarette Packaging?

NEW YORK (TheStreet) -- Shares of Philip Morris International (PM) are slightly lower at the market open as the world's biggest tobacco company is prepared to sue the British government should it implement a law requiring plain packaging of cigarettes, according to a document seen by Reuters.

The U.K. government conducted a consultation with its Department of Health on potential legislation which would force cigarette makers to sell their products in plain packages with graphic health warnings and no branding, Reuters noted.

The company told the U.K. government that it "is prepared to protect its rights in the courts and to seek fair compensation for the value of its property."

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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. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."

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 67.91%. 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, the net profit margin of 23.73% trails the industry average.
  • PM, with its decline in revenue, slightly underperformed the industry average of 0.5%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PHILIP MORRIS INTERNATIONAL's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PHILIP MORRIS INTERNATIONAL increased its bottom line by earning $5.26 versus $5.18 in the prior year. For the next year, the market is expecting a contraction of 1.5% in earnings ($5.18 versus $5.26).
  • Net operating cash flow has decreased to $2,705.00 million or 13.77% when compared to the same quarter last year. Despite a decrease in cash flow PHILIP MORRIS INTERNATIONAL is still fairing well by exceeding its industry average cash flow growth rate of -30.72%.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Tobacco industry average. The net income has decreased by 12.9% when compared to the same quarter one year ago, dropping from $2,124.00 million to $1,851.00 million. 
  • You can view the full analysis from the report here: PM Ratings Report

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