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The year 2024 is turning out to be strong for Philip Morris International (PM - Free Report). The tobacco giant surged about 44% from mid-April to early September, rebounding from a downturn earlier in the year.

Philip Morris International posted robust third-quarter 2024 results on Oct. 22, wherein the top and bottom lines increased year-over-year and beat the Zacks Consensus Estimate. The cigarette maker was experiencing a downtrend, declining approximately 6.7% from early September before rebounding with a surge of around 10% following the earnings announcement.

Q3 Performance in Detail

The tobacco company reported adjusted earnings per share (EPS) of $1.91, which jumped 14.4% from the year-ago quarter. Markedly, the bottom line beat the Zacks Consensus Estimate of $1.83 by 4.37%. Excluding currency movements, adjusted EPS for the quarter increased 18% year-over-year to $1.97.

Net revenues of $9.9 billion saw an increase of 11.6% on an organic basis from the same quarter last year, driven by robust pricing and rising demand for smoke-free products. The Zacks Consensus Estimate for the top line was pegged at $9.57 billion, reflecting a positive surprise of 3.55%. Operating income for the quarter reached $3.7 billion, marking an increase of 13.8% from the year-ago quarter on an organic basis.

Total cigarette and HTU shipment volumes increased by 2.6% to about 198.6 billion units in the quarter, driven by an 8.9% increase in HTU shipments across all regions. Philip Morris' Total Oral SFP shipment volume increased 24.7% from the year-ago quarter, boosted by a 43.6% increase in shipment volumes for the company's Nicotine Pouches.

Philip Morris International's Quest for a Smoke-Free Future

The smoke-free business (SFB) of the world’s largest tobacco company accounted for about 38% of its total net revenues, highlighting Philip Morris’ goal of transforming into a smoke-free enterprise. Continuing with its robust momentum, SFB’s top line witnessed organic growth of 16.8% year-over-year, with a 20.2% organic increase in its gross profits.

According to Reuters, higher prices and robust demand for Philip Morris' smoke-free alternatives fueled the rise in the tobacco giant’s profit forecast and robust third quarter. Philip Morris has invested billions in developing cigarette substitutes as health-conscious consumers shift toward alternatives like its IQOS heated tobacco device and ZYN nicotine pouches, which have become a key focus for investors.

Guidance

For 2024, Philip Morris International expects adjusted EPS in the band of $6.45-$6.51, highlighting growth of 7.3%-8.3% from the year-ago figures. The company had reported EPS of $6.01 in 2023. Excluding currency movements, adjusted EPS is envisioned in the band of $6.85-$6.91, suggesting 14%-15% growth from the year-ago reported figure.

For 2024, Philip Morris expects net revenues to increase in the band of 9.5% on an organic basis, along with organic growth of 14%-14.5% in its operating income. The tobacco giant forecasts an acceleration in its organic smoke-free net revenues and gross profit growth from 2023.

ETF Impact

Here, we have highlighted some ETFs with significant exposure to Philip Morris International.

iShares U.S. Consumer Staples ETF (IYK - Free Report)

The iShares U.S. Consumer Staples ETF has 8.39% exposure in Philip Morris International. The fund has gained 0.14% over the past month and 16.44% over the past year. The ETF charges an annual fee of 0.40%.

First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report)

The First Trust Morningstar Dividend Leaders Index Fund has an exposure of 5.98% in Philip Morris International. The fund has gained 1.74% over the past month and 31.27% over the past year. The fund charges an annual fee of 0.45%.

Invesco S&P Ultra Dividend Revenue ETF (RDIV - Free Report)

The Invesco S&P Ultra Dividend Revenue ETF has an exposure of 5.57% in Philip Morris. The fund has gained 0.67% over the past month and 39.68% over the past year. The ETF has an expense ratio of 0.39%.

Amplify AI Powered Equity ETF (AIEQ - Free Report)

The Amplify AI Powered Equity ETF has 5.79% weight in Philip Morris International. The fund has gained 1.94% over the past month and 27.03% over the past year. The ETF charges an annual fee of 0.75%.

Cambria Cannabis ETF (TOKE - Free Report)

Finally, the Cambria Cannabis ETF has an exposure of 4.81% in Philip Morris. The fund has gained 4.64% over the past month and 8.73% over the past year. The ETF charges an annual fee of 0.42%.

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