Philip Morris International (PM) Spotted As Roof Leaker Today

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.

Trade-Ideas LLC identified Philip Morris International ( PM) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Philip Morris International as such a stock due to the following factors:

  • PM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $380.7 million.
  • PM has traded 2.4 million shares today.
  • PM is trading at 2.04 times the normal volume for the stock at this time of day.
  • PM crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on PM:

Philip Morris International Inc., through its subsidiaries, manufactures and sells cigarettes and other tobacco products. The company's portfolio of brands include Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White. The stock currently has a dividend yield of 4.7%. PM has a PE ratio of 17.0. Currently there are 9 analysts that rate Philip Morris International a buy, 2 analysts rate it a sell, and 3 rate it a hold.

The average volume for Philip Morris International has been 4.1 million shares per day over the past 30 days. Philip Morris International has a market cap of $133.6 billion and is part of the consumer goods sector and tobacco industry. The stock has a beta of 1.06 and a short float of 0.7% with 2.16 days to cover. Shares are down 1.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Philip Morris International as a hold. 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 ratings report include:
  • 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 -31.02%.
  • 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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