Altria Group Inc (MO)

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Earnings Preview: Altria Group Inc. (NYSE: MO)
By: 24/7 Wall St. | January 30, 2023

• Here are previews of four firms expected to post quarterly results first thing Wednesday morning.

Altria

The maker and U.S. distributor of Marlboro cigarettes, Altria Group Inc. (NYSE: MO), has managed to reverse a two-quarter decline in its share price, but the stock still trades down about 12.3% for the past 12 months. The company’s massive dividend makes up for a lot of sins, however, and the stock has outperformed the S&P 500 index for five straight years.

Last week, e-cigarette maker Juul was reported to be in talks with Altria, its sister company Philip Morris and Japan Group about an acquisition. Altria paid $12.8 billion in 2018 for a 35% stake in Juul and has since marked that down to a value of just $ billion. The SEC is trying to unwind the Juul acquisition, and the FDA has ordered the company to stop U.S. sales, but Juul was granted a stay pending its appeal. The short version of the story is that, in the near term, Altria looks good. In the longer term, maybe not so much.

Sentiment on Altria is positive but not strong. Of 18 analysts covering the stock, 10 have a Hold rating, while another six rate the shares at Buy or Strong Buy. At a recent price of around $44.00 a share, the implied gain based on a median price target of $49.50 is 12.5%. At the high price target of $68.00, the upside potential is about 54.5%.

Fourth-quarter revenue is forecast at $5.15 billion, which would be down 4.9% sequentially but up 1.2% year over year. Adjusted EPS are forecast to come in at $1.16, down 9.4% sequentially and 6.4% lower year over year. For the full 2022 fiscal year, Altria is expected to report EPS of $4.81, up about 4.4%, on sales of $20.77 billion, down about 1.6%.

Altria stock trades at about 9.2 times expected 2022 EPS, 8.8 times estimated 2023 earnings of $5.00 and 8.4 times estimated 2024 earnings of $5.24 per share. The stock’s 52-week trading range is $40.35 to $57.05, and Altria pays an annual dividend of $3.76 (yield of 8.52%). Total shareholder return over the past year is negative 5.1%.

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