Philip Morris International (NYSE:PM) has just announced its earnings, and shares are getting a haircut this morning. Perhaps a pullback here is warranted as I initiated coverage of at $85.50 in fall of 2015. Since then, shares are up significantly, but the name has had its ups and downs, allowing for strong add-on opportunities as well as trading potential. Is this another opportunity? Well, with the strong dividend and innovation being put out by the company for alternative forms of tobacco and novel products being brought to market, it very well may be, even if many first-world countries continue to fight smoking. While this has had an impact, there is of course a bountiful market in third-world countries of traditional cigarettes, while the aforementioned countries are being introduced to new products.
That all said, I am revisiting the name because it has pulled this week, and there is a dichotomy growing between the bulls and bears on this name. Let us discuss. The quarter was pretty weak bad on the surface. Are we seeing an overreaction? Well, based on the tweets, messages, and investing forum posts this morning, you might think the sky is falling. So many are surprised by this. But why? I have been bullish but have to acknowledge that there has been significant sales pressure. As you know, I recommend holding a core position that you add to on dips and sell some when the stock gets ahead of itself a bit. While performance is showing some growth in sales, you must realize that for many quarters, revenues were declining on an annual basis. So, this is something to keep in mind as the company is working to evolve and keep the revenue streams coming in, while maintaining a very shareholder-friendly environment.
