2024-06-25 23:28:23 ET
Summary
- Altria Group is facing several challenges which are reflected in its rock-bottom valuation, but it has some core strengths which make the stock a Buy.
- The biggest issue is the secular decline in shipment volume of its smokeable products, which declined by a staggering 10 percentage points YoY in the recent quarter.
- However, the company is making up for these lost volumes with price increases, and the worst-case scenario for volume decline is also not too bad for the long-term EPS trajectory.
- The forward PE ratio is only 9 while the EPS projection for 2 fiscal years ahead is also quite stable at $5.5.
- Beyond the short-term doom and gloom sentiment, the company has good fundamentals which can easily beat S&P 500 returns, especially if we face a recessionary environment.
Altria Group ( MO ) has shown some bullish rally in the year-to-date but the stock price is still 40% below the past peak of $75 hit in 2017. One of the key reasons behind the negative sentiment towards Altria stock is the rapid decline in the shipment volume of its smokeable products. In the latest quarter, total cigarette volume declined by 10% YoY and its Marlboro brand declined by 8.7%. The shipment volume has been declining for most of the last decade, and this decline has increased over the past quarters. The shipment volume declined from 134 billion in 2012 to 76 billion sticks in 2023 which equates to a 5% annualized decline in cigarette shipment volume....
Read the full article on Seeking Alpha
For further details see:
Altria: 8.5% Dividend Looks More Attractive In An Overheated Stock Market