Analysts at Stifel have expressed optimism over American tobacco companies, as they prepare to report their third-quarter earnings in the coming week.
Philip Morris (NYSE:PM) and Altria (NYSE:MO) are due to report their earnings on October 21 and October 30, respectively, before market open. Wall Street expects both the companies’ earnings to rise in the quarter.
For PM, the consensus EPS Estimate is $2.10, a 9.9% year-on-year jump, while MO is expected to see a 5.1% Y/Y jump in its EPS to $1.45. On the revenue side, PM is expected to report a 7.6% Y/Y rise to $10.66 billion, while MO may see a slight dip in its revenue to $5.31 billion.
Stifel analysts, led by Matthew Smith, see an upside for Philip Morris driven by growth momentum in smoke-free products, including normalized U.S. ZYN inventory levels, accelerating volumes, and expanding margins. The company has the strongest growth potential for 2025-2026 and is well-positioned for robust share performance, they added.
“2026 should feature a strong performance in the smoke-free portfolio (IQOS, ZYN, and VEEV e-vapor), supporting another year of total company volume growth and continued margin expansion. We estimate nearly 7% organic sales growth and EPS of $8.36, representing 10% growth on a constant currency basis,” Stifel noted.
The brokerage has projected a modest growth for Altria, reflecting a weak but improving cigarette volume environment, high exposure to combustibles versus smoke-free, and elevated investments.
Stifel sees Altria’s robust pricing to offset the elevated rates of cigarette volume declines and strong growth in smoke-free categories.
Over the last 2 years, PM has beaten EPS estimates 88% of the time and has beaten revenue estimates 75% of the time, while MO has beaten EPS estimates 63% of the time and has surpassed revenue estimates 50% of the time.
Over the last 3 months, PM’s EPS estimates have seen 4 upward revisions and 7 downward moves, while revenue estimates have seen 5 upward revisions as well as downward moves. For MO, EPS estimates have seen 2 upward revisions and 5 downward moves, while revenue estimates have seen 3 upward revisions and 3 downward adjustments over the last 3 months.