PM - Altria: Unwarranted Pessimism With A 9% Yield

2024-06-18 08:30:00 ET

Summary

• Altria Group stock has performed reasonably well recently.
• Altria needs to execute its smokeless transition well to lift its well-battered valuation further.
• Structural headwinds on its legacy tobacco segment are likely priced into its attractive valuation.
• Income investors should also find the stock's almost 9% dividend yield attractive.
• I argue why continued pessimism in MO is unwarranted, as its price action is also increasingly bullish.

Altria Needs To Execute Its Smokeless Transition Well

Altria Group's ( MO ) stock has performed reasonably well since my previous bullish article in March 2024. I kept my Buy rating, as I assessed a less hawkish Fed should provide more robust valuation support. As a result, even though Altria's Q1 earnings release saw a net revenue decline of 2.5%, investors weren't unduly concerned. Furthermore, Altria reaffirmed its full-year guidance, indicating Wall Street was too pessimistic. Altria underscored a potentially more robust second half, suggesting a growth inflection is in the works....

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