Consumer Staples ETFs Shine on Philip Morris' Q4 Earnings Results

Philip Morris International Inc. PM reported fourth-quarter 2019 results on Feb 6, before market open. Earnings met estimates while revenues topped the same. Since the earnings release, Philip Morris’ shares have gained about 4.2% (read: Will Virus Infect Q1 Earnings? Multi-Asset ETFs to Play).

Q4 in Detail

Philip Morris reported adjusted earnings per share (EPS) of $1.22, on par with the Zacks Consensus Estimate. However, the bottom line declined 2.4% year over year. After excluding currency, the bottom line rose 4.3%.

Net revenues of $7.71 billion surpassed the Zacks Consensus Estimate of $7.68 billion. Moreover, the top line rose 2.9% year over year. Furthermore, the metric increased 6.3% at constant currency (cc) on favorable pricing across most regions partly negated by adverse volume/mix.

Adjusted operating income went up 6% year over year to $2.86 billion.

Shipment Volume

The company’s total cigarette and heated tobacco unit shipment volume fell 5% to 192.2 billion units. While cigarette shipment volume declined 8% to 175.1 billion units in the fourth quarter, heated tobacco unit shipment volume of almost 17.1 billion units reflected a year-over-year rise of 40.7%.

Shipment volumes in the Eastern Europe rose 1.2% year over year. Meanwhile, there was a decline in shipment volumes in the European Union, Middle East & Africa, South & Southeast Asia and East Asia & Australia and Latin America & Canada regions.

Outlook Reiterated

Philip Morris envisions adjusted EPS of $5.50 for 2020. Excluding the expected currency impact of 4 cents, earnings are anticipated to be at least $5.54, which indicates growth of at least 8% from the year-ago quarter’s reported figure.Further, management expects effective tax rate for 2020 to be roughly 23%.

ETF Impact

Some consumer staples ETFs with significant exposure to Philip Morris seemed to have gained since its earnings release.

Vanguard Consumer Staples ETF VDC

This fund is one of the most popular funds in the Consumer Staples sector of the United States. It has AUM of $5.70 billion and charges a fee of 10 basis points a year. From a sector-look, Household products, Soft drinks and Packaged Foods & Meats have the highest exposure to the fund, with 22.7%, 20.8% and 17.4% allocation, respectively. It has 4.4% exposure to Philip Morris.

The fund has returned 17% in a year. Since the earnings release, the fund has gained about 0.3%. VDC has a Zacks ETF Rank #1 (Strong Buy), with a Medium risk outlook (read: Consumer Staples' ETFs Hitting New Highs).

Fidelity MSCI Consumer Staples Index ETF FSTA

This fund offers exposure to the Consumer Staples sector of the United States at a very low expense ratio. It has AUM of $621.1 million and charges a fee of 8 basis points a year. From an industry-exposure look, Beverages, Household Products and Food & Staples Retailing have the highest exposure to the fund, with 25.6%, 22.7% and 20.6% allocation, respectively. It has a 6.34% exposure to Philip Morris. The fund has returned 18.2% in a year.

Since the earnings release, the fund has gained about 0.5%. FSTA has a Zacks ETF Rank #1 with a Medium risk outlook.

iShares U.S. Consumer Goods ETF IYK

This ETF tracks the Dow Jones U.S. Consumer Goods Index, giving investors exposure to the broad Consumer Staples space. It has AUM of $543.1 million and charges a fee of 42 basis points a year. From a sector-look, Food Beverage Tobacco, Household & Personal Products and Consumer Durables have the highest exposure to the fund, with 44.9%, 21.8% and 15.6% allocation, respectively. It has an exposure of 5.58% to Philips Morris.

The fund has returned 19.4% in a year. However, the fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Since the earnings release, the fund has gained about 0.04% (see all Consumer Staples ETFs here).

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Philip Morris International Inc. (PM) : Free Stock Analysis Report
 
Fidelity MSCI Consumer Staples Index ETF (FSTA): ETF Research Reports
 
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
 
iShares U.S. Consumer Goods ETF (IYK): ETF Research Reports
 
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