NEW YORK (TheStreet) -- Shares of Philip Morris International (PM) - Get Report are up by 0.97% to $88.51 on Wednesday morning, despite an adviser to Europe's highest court saying an EU law on cigarettes was valid, Reuters reports.
The court still needs to deliver its final ruling on what has been described as some of the world's "strictest anti-tobacco legislation."
The EU Tobacco Products Directive was adopted in May of 2014 and is supposed to begin being enforced in 2016. Key provisions include the standardization of packaging, a prohibition of menthol cigarettes by 2020 and special rules on e-cigarettes, Reuters noted.
Philip Morris and British American Tobacco have challenged the law, which must still be adopted by the court in Luxembourg.
The courts final ruling should arrive in the coming months and often the opinions of the court advisers are reflected in the decision, Reuters added.
Smoking is the largest cause of premature death in Europe, Reuters said. Smoking is responsible for almost 700,000 deaths across the continent annually.
Philip Morris is a Richmond, VA-based manufacturer and seller of cigarettes and other tobacco and nicotine containing products.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate PHILIP MORRIS INTERNATIONAL as a Hold with a ratings score of C+. 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 solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.
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 67.98%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 28.03% trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 14.4%. Since the same quarter one year prior, revenues fell by 11.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Tobacco industry average, but is greater than that of the S&P 500. The net income has decreased by 9.9% when compared to the same quarter one year ago, dropping from $2,155.00 million to $1,942.00 million.
- Net operating cash flow has declined marginally to $2,693.00 million or 9.17% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, PHILIP MORRIS INTERNATIONAL has marginally lower results.
- You can view the full analysis from the report here: PM