On Thursday, Philip Morris International (NYSE:PM) will release its quarterly report, and shareholders have worried about adverse trends from the global tobacco giant lately. Even as many investors chose to invest in Philip Morris rather than domestic peers Altria Group (NYSE:MO) and Lorillard (NYSE:LO) because they saw prospects internationally as supporting greater growth, many of the same headwinds that have held back sales in the U.S. are starting to appear in foreign countries, as well.

When Altria Group spun off Philip Morris International years ago, investors jumped at the opportunity to get exposure to what they saw as a much friendlier regulatory environment abroad for tobacco companies. Given the long legal battles that Altria Group, Lorillard, and other U.S. tobacco companies have faced, Philip Morris International's clean slate was especially attractive to growth investors. Yet, in recent years, Philip Morris has started to see foreign governments come out with regulations similar to what U.S. companies face, and that, in turn, has limited some of its growth potential. Let's take an early look at what's been happening with Philip Morris International during the past quarter, and what we're likely to see in its report.

Source: Wikimedia Commons, courtesy Takeaway.

Stats on Philip Morris International

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$7.03 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Philip Morris earnings start climbing again?
In recent months, analysts have cut their views on Philip Morris International earnings dramatically, slashing 10% from their first-quarter estimates, and about $0.40 per share from their full-year 2014 and 2015 projections. The stock has held up relatively well, though, rising 3% since early January.

Philip Morris International's fourth-quarter results showed some of the factors influencing the tobacco company's earnings recently. Cigarette shipments fell 4.3% during the quarter, with much of the decline coming from the Philippine government imposing a big tobacco-tax hike that, in some cases, quadrupled the old tax amount. But the strong U.S. dollar also played a major role, with currency factors cutting Philip Morris adjusted earnings by 8%. With the company expecting those currency issues to continue this year, Philip Morris could see further challenges to growth that domestic companies Altria and Lorillard simply don't have to deal with.

Unfortunately, Philip Morris could face an even tougher road due to geopolitical and economic turmoil. Philip Morris counts Russia and Turkey as key growth opportunities, and major hits to their respective local currencies could punish the company further. In particular, with the dispute between Russia and the Ukraine heating up once again, the impact on the Russian ruble could pose more threats to Philip Morris if escalation continues.

Greater regulation abroad has introduced even more difficulties for Philip Morris that go beyond the simple impact of government measures to limit tobacco sales. For instance, Australia's ban on brand packaging has hurt sales directly, but it has also made it far easier for illegal smugglers to sell cigarettes in a way that both evades Australian taxes and hurts Philip Morris' own bottom line. With huge tax disparities between nations in the Asian region, stopping the flow of products across jurisdictional lines represents a huge challenge, and one that Philip Morris needs to see fixed in order to bolster its results to the maximum extent possible.

But one big opportunity for Philip Morris comes from electronic cigarettes, where Philip Morris and Altria are working together to try to bolster their brand presence. Lorillard got out to an early start in the e-cigarette craze, but Philip Morris has invested toward creating a manufacturing facility in Italy for alternative products. The move could bring vital growth back to Philip Morris if e-cigarettes get the same reception abroad that they've gotten in the U.S. market.

In the Philip Morris earnings report, watch to see how volume trends are faring, but also look for further news about future strategy. To reassure investors, Philip Morris needs to move forward with growth initiatives that can reverse any trend toward shrinking cigarette demand.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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