2024-04-26 11:50:52 ET
Summary
- Altria Group's Q1 2024 earnings were mixed, with a missed revenue number but in-line EPS, but management reaffirmed its 2024 EPS guidance.
- The company is diversifying its product mix away from traditional cigarettes and making progress in smokeless lines and oral tobacco.
- Altria Group remains a highly profitable company with high margins and offers a dividend yield of around 9%, with potential for future dividend increases.
Altria Group ( MO ) has been a battleground stock for years. The bears have been winning as shares have declined by -15.76% over the past five years. This has caused the dividend yield to gradually increase as MO has increased the dividend payment on an annual basis while its share price deteriorated. One of the main bear cases is the decline in cigarette consumption, while investors such as myself look at the underlying fundamentals and significant value under the hood of MO. Thursday morning, MO reported their Q1 earnings , which were a bit mixed as the revenue number was missed by $10 million while their EPS was in line with estimates. The big takeaway was that management reaffirmed its 2024 EPS guidance of $5.05 to $5.17, as this is indicating MO is making significant progress in diversifying its product mix. The market seems to be reacting well to earnings, and I feel that we have seen the consolidation period as shares traded sideways at the $40 level for some time. MO is a profit center, and while nobody is forced to use their products, they are a highly profitable company that trades at a forward P/E in the high single digits, which can't be disputed. I believe there is still plenty of value waiting to be unlocked in shares of MO, and investors can still lock in a dividend yield of around 9%. 2024 could be the year that MO gets its groove back, and all signs indicate that investors will get another dividend increase this summer....
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Altria Group: Q1 Earnings Reaffirmed My Bullish Sentiment As The Yield Exceeds 9%