Philip Morris International(NYSE: PM) shares hit an all-time high following its latest earnings results. The stock is now up nearly 40% in 2025, as of this writing, and over 75% in the past year. I own the stock and have written about it in the past, including last April when I predicted that the stock could soon break out of its year-long trading range. Boy, has it ever.
With that said, what investors really want to know now is whether they can still buy the stock or if it’s too late. Let’s take a closer look at its first-quarter results to find out.
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Philip Morris’ biggest growth driver continues to be Zyn. For those unfamiliar with Zyn, it is a pouch made of nicotine powder and flavoring instead of tobacco, and it has taken the U.S. market by storm. It has become popular among young adults, office workers, and even women who like its discreet use, flavors, and the buzz they get from the product.
In Q1, Zyn’s strong growth continued, with U.S. shipment volumes soaring 53% to 202 million cans. International volumes also rose 53%, or 182% excluding its established Nordic markets. Overall oral product shipments climbed 27%.
That said, some of the growth came from retail inventory restocking. At the retail level, the company saw solid off-take volume growth for Zyn of around 15%. It expects this growth to gradually accelerate in the coming months as in-store availability improves and it increases its marketing efforts. Due to its solid results, it now expects U.S. ZYN shipments to be between 800 million and 840 million cans, up from a prior outlook of between 780 million and 820 million cans.
Image source: Getty Images.
Zyn was not the company’s only strong performer in the quarter. Heated tobacco units (HTUs) volumes, including the IQOS system, jumped nearly 12% to 37.1 billion units. The company said in-market sales (those to end users) rose 9% in Japan and more than 7% in Europe. It also noted strong growth coming from cities outside of Japan and Europe, including Jakarta, Seoul, and Mexico City. Philip Morris also saw shipment growth more than double for its e-vapor product, VEEV, led by pod growth in Europe.
Traditional cigarette volumes, meanwhile, remain steady, rising 1.1% to 144.8 billion units. Its market share, excluding the U.S. and China, rose 0.2% to 23%, or by 0.4% to 24.8% when including HTUs.
Overall, organic revenue, which excludes currency effects, acquisitions, and dispositions, rose 10% year over year to $9.3 billion. Adjusted earnings per share (EPS) climbed 17% to $1.76.
On an organic basis, combustible tobacco revenue rose 4%, driven by price increases and modestly growing volumes. The smoke-free business saw organic revenue surge 20%.
Oral Products (Zyn)
HTUs
Cigarettes
Smoke-Free
Total
Volume growth
27.2%
11.9%
1.1%
N/A
3.9%
Organic revenue growth
N/A
N/A
3.8%
20.4%
10.2%
HTUs = heated tobacco units.
Gross profits grew faster than revenue, rising 16% organically, as both Zyn and IQOS have higher gross margins than the company’s traditional cigarette business. Gross margins rose 340 basis points year over year on an organic basis. The company also noted that gross margins improved for all three of its smoke-free categories, helped by price increases for Zyn and IQOS.
Looking ahead, Philip Morris largely maintained its full-year outlook, making just a slight adjustment to its adjusted EPS forecast due to currency.
Guidance
Organic revenue growth
6% to 8%
Adjusted EPS
$7.01 to $7.14
Adjusted EPS growth, excluding currency
10.5% to 12.5%
Volume growth
2%
Data source: Philip Morris International. EPS = earnings per share.
Philip Morris continues to see strong growth led by Zyn and IQOS. Both products are growing nicely, and they both have better unit economics than Philip Morris’ traditional cigarette business. That said, its traditional cigarette business also remains solid, with modest volume growth and strong pricing power. This is a much different picture from companies that sell cigarettes in the U.S.
Zyn and IQOS also continue to have solid expansion opportunities ahead. The company is still increasing capacity in the U.S. to keep up with Zyn demand, while it is just starting to expand internationally outside its established Nordic markets. Meanwhile, after buying back the U.S. rights to IQOS, Philip Morris has just started testing IQOS in Austin, Texas. It hopes to expand to other test markets and then later do a full launch when its new IQOS ILUMA device receives FDA approval.
From a valuation standpoint, the stock trades at a forward price-to-earnings (P/E) ratio of 23 times, based on the analyst consensus for 2025, with a PEG (price/earnings-to-growth) ratio of under 0.4. Stocks with PEG ratios under 1 are typically considered undervalued, so based on this metric, the stock is still cheap.
Overall, Philip Morris is a growth stock in a defensive industry, with an attractive 3.2% forward dividend yield. It has solid growth opportunities ahead, and it is pretty tariff resilient, given that it tends to use local manufacturing. As such, I think investors can still look to buy the stock, especially on any future dips.
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Geoffrey Seiler has positions in Philip Morris International. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.
