Tobacco company Philip Morris International (NYSE: PM) fell short of the market’s revenue expectations in Q2 CY2025, but sales rose 7.1% year on year to $10.14 billion. Its non-GAAP profit of $1.91 per share was 2.8% above analysts’ consensus estimates.
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Philip Morris (PM) Q2 CY2025 Highlights:
- Revenue: $10.14 billion vs analyst estimates of $10.28 billion (7.1% year-on-year growth, 1.4% miss)
- Adjusted EPS: $1.91 vs analyst estimates of $1.86 (2.8% beat)
- Operating Margin: 36.6%, in line with the same quarter last year
- Market Capitalization: $280.9 billion
Company Overview
Founded in 1847, Philip Morris International (NYSE: PM) manufactures and sells a wide range of tobacco and nicotine-containing products, including cigarettes, heated tobacco products, and oral nicotine pouches.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $39.06 billion in revenue over the past 12 months, Philip Morris is one of the most widely recognized consumer staples companies. Its influence over consumers gives it negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don’t have).
As you can see below, Philip Morris’s sales grew at a decent 7.3% compounded annual growth rate over the last three years as consumers bought more of its products.
This quarter, Philip Morris’s revenue grew by 7.1% year on year to $10.14 billion, missing Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 11% over the next 12 months, an acceleration versus the last three years. This projection is particularly noteworthy for a company of its scale and indicates its newer products will spur better top-line performance.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Philip Morris has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the consumer staples sector, averaging 24.6% over the last two years.
Key Takeaways from Philip Morris’s Q2 Results
It was encouraging to see Philip Morris beat analysts’ gross margin and EPS expectations this quarter. On the other hand, its revenue slightly missed. Overall, this was a mixed quarter. The stock traded down 4% to $173.50 immediately following the results.
The latest quarter from Philip Morris’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
