Here’s What To Expect From Altria’s Q1

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MO: Altria Group logo
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Altria Group

Altria (NYSE: MO) will report its Q1 2023 results on Thursday, April 27. We expect MO stock to see little movement, with its revenue and earnings aligning with the street expectations. Although the company should continue to see a decline in cigarette volume, given the declining market and higher inflation, pricing growth will likely help offset the revenue loss from volume. Also, we believe MO stock looks reasonably priced from a valuation perspective, as discussed below. Our interactive dashboard analysis of Altria Earnings Preview has additional details.

(1) Revenues expected to align with the consensus estimates

  • Trefis estimates Altria’s Q1 2023 revenues to be around $4.9 billion, reflecting a low single-digit y-o-y rise and in line with the consensus estimate.
  • Altria sells its tobacco products in the U.S.  Revenue is generated from selling cigarettes, oral tobacco, and smokeless products.
  • While the company is expected to see continued pricing growth, lower shipment volume will likely weigh on its top-line growth.
  • Looking at Q4 2022, the company reported net revenue of $5.1 billion, marking a 0.1% decline over the prior-year quarter.
  • The decline in revenue can be attributed to lower cigarette volume, down 12%, and oral tobacco products volume, down 4%.
  • Our dashboard on Altria Revenues has details on the company’s segments.
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(2) EPS likely to be in line with the consensus estimates

  • Altria’s Q1 2023 adjusted earnings per share (EPS) is expected to be $1.19 per Trefis analysis, aligning with the consensus estimate. This compares with the $1.12 figure the company reported in the prior-year quarter.
  • The company’s net income of $2.1 billion in Q4 2022 reflected a modest rise from the $2.0 billion figure in the prior-year quarter due to a 220 bps y-o-y rise in operating margin to 58.4%.
  • For the full-year 2023, we expect the adjusted EPS to be higher at $5.03 compared to $4.85 in 2022.

(3) MO stock looks appropriately priced

  • We estimate Altria’s Valuation to be around $50 per share, about 6% above the current market price of $47.
  • At its current levels, MO stock is trading at a little under 9x forward EPS estimate of $5.03 in 2023, aligning with its last three-year average, implying that it is appropriately priced.
  • If the company reports upbeat Q1 results and provides a 2023 outlook better than the street estimates, the P/E multiple will likely be revised upward, resulting in higher levels for MO stock.

While MO stock looks reasonably priced, it is helpful to see how Altria’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Ecolab vs. Philip Morris.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Apr 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 MO Return 5% 3% -31%
 S&P 500 Return -1% 6% 82%
 Trefis Multi-Strategy Portfolio -1% 6% 235%

[1] Month-to-date and year-to-date as of 4/26/2023
[2] Cumulative total returns since the end of 2016

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