Philip Morris International (PM -0.17%) 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 -0.11%) 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.

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