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$10,000 Invested in Philip Morris International in January Would Be Worth This Much Today

By Rich Duprey – Aug 20, 2020 at 10:04AM

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The surge in cigarette stockpiling early on in the pandemic has since moderated.

Philip Morris International (PM -2.12%) stock is down almost 8% in 2020, never having regained the levels it traded at before the coronavirus pandemic swept the country and cratered the stock market in March.

While shares have rebounded 40% from the low point hit back then, investors may be surprised the global cigarette giant isn't performing better.

Couple holding an IQOS heated tobacco device

Image source: Philip Morris International.

Stubbing out growth

Like other tobacco companies, Philip Morris saw a surge in cigarette sales early on in the health crisis as smokers hoarded cigarettes as the world came to grips with what the COVID-19 outbreak meant.

First-quarter revenue jumped 10% while adjusted earnings per share surged over 25% as the pandemic contributed 2 and 6.8 percentage points of gain, respectively, to the results.

Yet that increase merely pulled sales forward, because in contrast, second-quarter currency-adjusted revenue was down 10% while adjusted earnings per share fell 7.5%.

Year to date, shipment volumes for both Philip Morris' cigarettes and its IQOS heated tobacco products are down over 8%, but that's because cigarettes still account for the majority of its sales and their shipments fell 11% year over year. IQOS shipments, on the other hand, have jumped 33% to more than 35 million units.

That should give investors encouragement that as Philip Morris marketing partner Altria (MO -1.64%) continues to roll out the IQOS into more markets, those shipments and sales should grow even more.

Philip Morris has a competitive advantage over the competition because the Food & Drug Administration has granted the IQOS a reduced-risk designation that other products can't match. And most companies likely won't make next month's deadline for submitting applications to keep their products on the market.

Even so, $10,000 invested in the tobacco giant on Jan. 1 would be worth just over $9,200 today.

PM Chart

PM data by YCharts

Rich Duprey owns shares of Altria Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Philip Morris International Inc. Stock Quote
Philip Morris International Inc.
PM
$87.02 (-2.12%) $-1.88
Altria Group, Inc. Stock Quote
Altria Group, Inc.
MO
$40.79 (-1.64%) $0.68

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