Philip Morris International Inc. (NYSE: PM) Reports Mixed Q2 Earnings

• Philip Morris International Inc. (NYSE:PM) surpassed EPS estimates but fell short on revenue expectations in Q2 2025.
• The company's smoke-free segment showed significant growth, contributing to 41% of total revenues.
• Despite strong financial performance, guidance for slower EPS growth in Q3 led to a nearly 4% drop in premarket trading.

Philip Morris International Inc. (NYSE:PM), a leading tobacco company known for its Marlboro cigarettes, reported its second-quarter earnings on July 22, 2025. The company achieved an earnings per share (EPS) of $1.91, surpassing the estimated $1.86. However, its revenue of $10.14 billion fell short of the anticipated $10.32 billion, leading to a mixed market reaction.

Despite the positive EPS, Philip Morris experienced a nearly 4% drop in premarket trading. This decline was primarily due to the revenue shortfall, attributed to decreased cigarette sales and lower-than-expected shipments of ZYN nicotine pouches. The market's negative response highlights the challenges Philip Morris faces in balancing earnings performance with revenue growth.

Philip Morris demonstrated a strong year-over-year revenue increase of 7.8%, reaching $10.14 billion. The company's gross profit surged by 17.6% to $6.9 billion, and operating income rose by 6.2% to $3.71 billion. These figures indicate significant margin growth, showcasing the company's ability to manage costs effectively despite revenue challenges.

The smoke-free segment of Philip Morris showed promising results, with a 15.2% revenue growth and a 23.3% increase in gross profit. This segment now accounts for 41% of the company's total revenues, reflecting a strategic shift towards reduced-risk products. The company raised its full-year adjusted EPS guidance to a range of $7.43 to $7.56, up from the previous forecast, indicating confidence in its future performance.

Philip Morris has a price-to-earnings (P/E) ratio of approximately 36.91, suggesting the price investors are willing to pay for each dollar of earnings. The company's price-to-sales ratio is about 7.33, reflecting the market's valuation of its revenue. Despite these positive metrics, the guidance for the third quarter suggests a slowdown in EPS growth, which may have contributed to the decline in stock price.