A month has gone by since the last earnings report for Philip Morris (PM). Shares have added about 0.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Philip Morris due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.

Philip Morris Q2 Earnings Beat Estimates, Organic Sales Rise 7.6% Y/Y

Philip Morris reported second-quarter 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year. 

PM posted quarterly adjusted earnings of $2.20 per share, which increased 15.2% year over year. Excluding currency effects, the adjusted earnings jumped 13.6% year over year. The bottom line beat the Zacks Consensus Estimate of $2.04.

Net revenues of $11,192 million increased 10.4% on a reported basis and 7.6% on an organic basis year over year. Revenues beat the Zacks Consensus Estimate of $10,556 million. The increase in organic revenues was backed by favorable pricing in the international combustibles business, with additional support from favorable volume/mix due to strong international smoke-free volumes, partly offset by an unfavorable international combustibles mix.

Total shipment volumes increased 2.5% to 205.2 billion units in the second quarter.

Adjusted gross profit increased 11.5% (up 8.7% on an organic basis) to $7,665 million, while adjusted operating income rose 12.4% to $4,773 million.

Decoding PM’s Segment Performance

Net revenues in the International Smoke-Free segment grew 14.2% (up 11.8% on an organic basis) to $3,877 million, attributed to a favorable volume/mix from higher HTU and e-vapor volumes, alongside favorable pricing driven by HTUs. Adjusted gross profit rose 17.1% (up 14.6% organically). Shipment volume grew 8% to 44.7 billion units, led by broad-based growth across markets, particularly Taiwan, Romania and Greece.

In the International Combustibles segment, net revenues increased 9.8% (up 6.4% organically) to $6,459 million, driven by favorable pricing, partly offset by an unfavorable geographic mix as growth in developing markets more than offset declines in Europe. Adjusted gross profit increased 11.5% (up 8% organically). Shipment volume increased 1.1% to 156.9 billion units, with growth in Turkey, Indonesia and Egypt.

Revenues in the U.S. segment fell 0.7% (down 0.9% on an organic basis) to $856 million, due to broadly stable ZYN revenues, declines in the cigar business and unfavorable timing effects in the Wellness business. Adjusted gross profit decreased 9% (down 8.9% organically).  Shipment volume increased 1.8% to 3.5 billion units.

Philip Morris: Other Updates

The company ended the quarter with cash and cash equivalents of $5,999 million, long-term debt of $42,366 million and a total shareholder deficit of $6,657 million.

Sneak Peek Into PM’s Outlook

Adjusted EPS for 2026 is now envisioned in the $8.26-$8.41 range, indicating 9.5-11.5% growth. Earlier, the metric was expected in the $8.36-$8.51 per share range, implying 10.9-12.9% growth. Adjusted EPS, excluding currency, is likely to be in the $8.11-$8.26 band, indicating a year-over-year increase of 7.5-9.5%. For 2026, Philip Morris expects reported EPS in the band of $7.19-$7.34 compared with $7.26 in 2025. Earlier, the metric was expected in the $7.56-$7.71 per share range. Overall shipment volumes are expected to remain stable to slightly increase, driven by continued high-single-digit growth in smoke-free products, while cigarette volumes are projected to decline 2-3%, compared with the previous expectation of around 3%.

For 2026, PM still expects net revenues to increase 5-7% on an organic basis. The operating income on an organic basis is likely to rise 7-9%. Management expects an operating cash flow of around $13.5 billion in 2026. Capital expenditures are likely to be in the band of $1.4 billion to $1.6 billion, primarily implying investments to support the smoke-free business.

For the third quarter of 2026, adjusted EPS is projected in the range of $2.20 to $2.25.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -5.71% due to these changes.

VGM Scores

Currently, Philip Morris has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Philip Morris has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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Philip Morris International Inc. (PM): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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