Altria Group Inc (MO)

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Earnings Previews: Altria (MO)...
By: 24/7 Wall St. | April 27, 2021

Altria

Marlboro cigarette maker Altria Group Inc. (NYSE: MO) trades more than 10 million shares on an average day. On April 19, the stock traded within a nickel of its 52-week high set in late March before, plunging by more than $5 following a report that the Federal Trade Commission has filed suit to unwind the company’s $12.8 billion deal for e-cigarette maker Juul.

Since the 2018 deal, Altria has written off about $8.6 billion of the value of its 35% stake in Juul. The FTC has been considering the action for the past year. Then a week ago, the Biden administration reportedly was considering lowering allowed levels of nicotine in cigarettes to the point where cigarettes are no longer addictive.

All that negativity has had little impact on eight sell-side analysts, who rate the stock a Buy or Strong Buy compared to just six who rate the stock at Hold. No analysts rate Altria a Sell. The consensus price target on the stock is $52.63 and shares trade at around $47, implying a potential upside of nearly 12%. At the high target of $66, the upside potential rises to more than 40%.

Analysts are looking for Altria to report Earnings per share (EPS) of $1.04, a decline of about 4.6% year over year, on sales of $4.98 billion, down about 1.4% year over year. For the full year, analysts forecast EPS of $4.57, up 4.89% year over year, on sales of $21.27 billion, up 2%.

At the current price, the stock trades at a multiple of 10.3 times expected 2021 EPS, 9.7 times estimated 2022 earnings and 9.1 times estimated 2023 earnings. Altria’s secret, of course, is its annual dividend of $3.44 per share. That works out to a yield of 7.29%, the third-highest among all S&P 500 components, outpacing both AT&T and Exxon Mobil, the other two behemoths in the top 10 dividend payers...

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