Altria Group, Inc. (MO), headquartered in Richmond, Virginia, manufactures and sells smokeable and oral tobacco products. Valued at $91.6 billion by market cap, the company offers cigarettes primarily under the Marlboro brand, large cigars and pipe tobacco under the Black & Mild brand, moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands, and more.
Shares of this leading tobacco company have underperformed the broader market over the past year. MO has gained 34.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 36.8%. However, in 2024, MO stock is up 34%, surpassing the SPX’s 25.7% rise on a YTD basis.
Narrowing the focus, MO’s outperformance is apparent compared to the Consumer Staples Select Sector SPDR Fund (XLP).The exchange-traded fund has gained about 17.5% over the past year. Moreover, MO’s returns on a YTD basis outshine the ETF’s 12.2% returns over the same time frame.
Despite facing challenges in its core business of traditional cigarette sales in the U.S., Altria has seen a decline in shipping volumes due to the country's decreasing smoking rates since the mid-1960s. In Q3, smokeable product volumes decreased by 8.4% year over year, reflecting the ongoing trend of fewer cigarettes being sold.
On Oct. 31, MO shares closed up more than 7% after reporting its Q3 results. Its adjusted EPS of $1.38 beat Wall Street expectations of $1.36. The company’s revenue stood at $6.3 billion, down marginally year over year. MO expects full-year adjusted EPS to be between $5.07 and $5.15.
For the current fiscal year, ending in December, analysts expect MO’s EPS to grow 3.2% to $5.11 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in two of the last four quarters while missing the forecast on two other occasions.
Among the 10 analysts covering MO stock, the consensus is a “Hold.” That’s based on three “Strong Buy” ratings, five “Holds,” and two “Strong Sells.”
This configuration is less bullish than two months ago, with four analysts suggesting a “Strong Buy.”
On Nov. 6, Barclays PLC (BCS) analyst Gaurav Jain kept an “Underweight” rating and raised the price target on MO to $46.
While MO currently trades above its mean price target of $52.50, the Street-high price target of $60 suggests an upside potential of 11%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
