Based in Richmond, Virginia, Altria Group, Inc. (MO) is a leading manufacturer and seller of smokeable and oral tobacco products in the U.S. Valued at $85.54 billion by market cap, the company's primary brands include Marlboro and Black & Mild. Altria owns Philip Morris USA and John Middleton, a prominent U.S. cigar manufacturer. Its smoke-free portfolio includes ownership of U.S. Smokeless Tobacco Company LLC and Helix Innovations LLC. The leading tobacco manufacturer is expected to announce its fiscal second-quarter earnings for 2024 before the market opens on Wednesday, Jul. 31.
Ahead of the event, analysts expect MO to report a profit of $1.35 per share on a diluted basis, up 3.1% from $1.31 per share in the year-ago quarter. The company beat or matched the consensus estimates in two of the last four quarters while missing on two other occasions.
For fiscal 2024, analysts expect MO to report EPS of $5.11, up 3.2% from $4.95 in fiscal 2023.
MO stock has outperformed the S&P 500’s ($SPX) 13.2% gains on a YTD basis, with shares up 23.5% during this period. Similarly, it outshined the S&P 500 Cons Staples Sector SPDR (XLP) 7.9% gains over the same time frame.
MO’s recent performance can be attributed to the growing potential of its smokeless products. With falling smoking rates globally, tobacco companies are focusing on next-generation products (NGPs), which are essentially less harmful alternatives to cigarettes. During Q1, MO’s oral nicotine pouch, On!, increased its market share to 7.1% in the oral tobacco category, up 6.4% year over year. On! volumes rose 32.1% year over year.
Last year, MO completed the acquisition of a pod-based electronic cigarette product, NJOY, and has ramped up its distribution to more than 82,000 stores in a year, registering an increase of 132%. Meanwhile, MO increased NJOY’s market share from 5.1% to 11.5% since the acquisition. Recently, the company received FDA authorization for the marketing of four menthol-flavored e-vapor products, making it the only FDA-authorized menthol e-vapor product in the market.
On Apr. 25, MO reported its Q1 results. Its adjusted EPS was $1.15, falling short of the consensus estimates of $1.16. The company’s adjusted revenue of $4.72 billion matched Wall Street expectations. For the full year 2024, MO expects its EPS to be between $5.05 and $5.17, representing a growth rate of 2% to 4.5% from a base of $4.95 in 2023. MO shares closed up more than 1% on the day the results were released and have been on an uptrend since then.
Analysts’ consensus opinion on MO stock is neutral, with a “Hold” rating overall. Out of 11 analysts covering the stock, four advise a “Strong Buy” rating, five recommend a “Hold” rating, and two give a “Strong Sell.” The average analyst price target for MO is $47.44, indicating a 4.7% potential downside from the current levels.
On the date of publication, Dipanjan Banchur 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.
