Philip Morris International Inc. Retains Hold Recommendation

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Philip Morris International (NYSE: PM) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and deteriorating net income.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $2,320.00 million or 40.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 29.76%.
  • PHILIP MORRIS INTERNATIONAL reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth 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. This year, the market expects an improvement in earnings ($5.38 versus $5.26).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 1.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, PM has underperformed the S&P 500 Index, declining 10.93% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • 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 5.2% when compared to the same quarter one year ago, dropping from $2,095.00 million to $1,987.00 million.

Philip Morris International Inc., through its subsidiaries, manufactures and sells cigarettes and other tobacco products. Philip Morris International has a market cap of $125.1 billion and is part of the consumer goods sector and tobacco industry. Shares are down 7.9% year to date as of the close of trading on Friday.

You can view the full Philip Morris International Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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