Altria (NYSE: MO) saw its stock price plummet by almost 40% over the last 3 years, from $74 in February 2017 to about $45 in February 2020. This drop was primarily driven by a complete washout of profitability in 2019, with the company reporting losses in 2019, led by a surge in impairment charges.
What happened to Altria’s stock?
The stock closed down nearly 4% on the day. Shares of Philip Morris were down close to 8% on Tuesday. Altria’s current market cap is $86.3 billion while Philip Morris’ stands at $129.4 billion. The two tobacco giants first broke apart in 2008 when Altria was spun off of Philip Morris.
What is Altria’s biggest investment in E-vaping?
One major factor – Altria’s big entry in e-vaping with an investment in JUUL and Cronos in 2019. Altria had invested about $12.8 billion for a 35% stake in JUUL Labs, valuing the e-vapor giant, which has a market share of over 70% in the US, at close to $38 billion.
Is Altria’s Juul overvalued?
A majority of analysts in the market believed that Altria had overvalued JUUL. This fear came to be true when Altria recorded an impairment of its value in JUUL and Cronos in Q3 2019. For the full year 2019, Altria recorded an impairment of over $10 billion reflecting reduction in the value of its holdings in these two companies.
Does Altria have headroom for price increase?
This leaves headroom for price increase for many years. As a U.S. pure play, Altria lacks exposure to some of the emerging markets in which total tobacco consumption is increasing, leaving it exposed to the secular decline rate that we estimate to be around 4% per year.
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Why did Altria drop?
Key Points. Markets finished mixed on Tuesday. Altria lost ground as a potential rift in its relationship with Philip Morris International opened. Unity Software suffered big declines following its first-quarter earnings report.
Is Altria a good long term stock?
Altria is not just a legendary dividend king, with 53-year of consecutive dividend increases to its name, but it's also the best performing stock in history. delivering 17.7% CAGR total returns for 90 years, or 173,000X returns, adjusted for inflation.
Is Altria a good stock to own?
Altria is also a Dividend King with a 50-plus-year streak of dividend increases of its own, so both companies deserve credit for their consistent commitment to shareholder returns. However, at the far superior current yield, right now, Altria is the winner here.
Is Altria a buy sell or hold?
For example, a stock trading at $35 with earnings of $3 would have an earnings yield of 0.0857 or 8.57%. A yield of 8.57% also means 8.57 cents of earnings for $1 of investment....Momentum Scorecard. More Info.Zacks RankDefinitionAnnualized Return1Strong Buy25.08%2Buy18.56%3Hold10.15%4Sell5.79%2 more rows
Is MO still a buy?
MO stock is technically a buy right now. Earnings growth for MO stock might tick higher this year.
How safe is Altria stock?
The Altria stock dividend appears safe. It consumes only a portion of the company's free cash flow. And that cash is supported by a consistent and proven business model. Also, Altria projects slow but profitable growth during the next 1-3 years.
Is Altria undervalued?
Altria: Stellar Dividend Yield Altria has struggled recently with poor capital allocation in JUUL and Cronos, and its ability to market iQOS is in doubt due to a patent ruling. Investors seeking income may be interested in its growing dividend with a ~6.7% yield. The stock is undervalued.
Is MO a good long term investment?
MO boasts a Growth Style Score of A and VGM Score of A, and holds a Zacks Rank #3 (Hold) rating. Its bottom-line is projected to rise 5% year-over-year for 2022, while Wall Street anticipates its top line to improve by 0.6%. Three analysts revised their earnings estimate upwards in the last 60 days for fiscal 2022.
Is MO a dividend king?
Tobacco giant Altria Group (MO) is the highest-yielding Dividend Kings. Altria is operating in a declining industry.
What is the outlook for Altria?
The 15 analysts offering 12-month price forecasts for Altria Group Inc have a median target of 57.00, with a high estimate of 68.00 and a low estimate of 50.00. The median estimate represents a +22.50% increase from the last price of 46.53.
How much debt is Altria?
Balance SheetDocument NameAs Of DateCurrency Code (in millions)2018 Y10-K12/31/2018USD2022 Q1 YTD10-Q3/31/2022USDTotal current liabilities21,19310,928Accrued liabilitiesShort-term borrowings12,704NALong-term debt11,89825,40549 more rows
Is Altria a monthly dividend?
(Altria) (NYSE: MO) today announced that its Board of Directors declared a regular quarterly dividend of $0.90 per share, payable on April 29, 2022 to shareholders of record as of March 25, 2022.
The tobacco products leader suffered multiple analyst downgrades today
As a technology and consumer goods specialist for the Fool, Steve looks for responsible businesses that positively shape our lives. Then he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.
What happened
Shares of Altria Group Inc. ( NYSE:MO) were down 5.2% as of 3:00 p.m. EDT Wednesday after several analysts downgraded shares of tobacco products giant.
So what
To justify his downgrade, Spielman argued that e-cigarette maker Juul is "beginning to disrupt the U.S. cigarette industry." As such, when Altria reports earnings next week, he believes it will confirm that industry volumes declined around 6% in the first quarter -- a trend that will mean Altria's valuation remains "depressed."
Now what
The bar isn't set particularly high, as investors expect Altria's quarterly sales will climb less than 1% from the same year-ago period, to roughly $4.62 billion. Thanks in part to tight cost controls, though, Altria's earnings per share are expected to simultaneously climb around 26%, to $0.92.
With legal challenges mounting for JUUL, the tobacco juggernaut took a huge impairment charge and reduced its targets for earnings growth
As a technology and consumer goods specialist for the Fool, Steve looks for responsible businesses that positively shape our lives. Then he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.
What happened
Shares of Altria Group ( NYSE:MO) were down 6% as of 2:15 p.m. EST Thursday, after the tobacco giant issued disappointing quarterly results.
So what
More specifically, Altria's fourth-quarter 2019 revenue increased 0.3% to $4.802 billion (after accounting for excise taxes), translating to a 7.4% increase in adjusted earnings to $1.02 per share. Analysts, on average, were expecting roughly the same per-share earnings, but on higher revenue of $4.88 billion.
Now what
"Despite the unexpected challenges related to our investment in JUUL, which led to impairment charges and reported losses, we made significant progress advancing and building our noncombustible business platform with the launch of IQOS and completion of the on! transaction," Willard added. "We enter 2020 with continued focus on harm reduction."
What happened
Shares of Altria Group Inc. (NYSE: MO) were down 5.2% as of 3:00 p.m. EDT Wednesday after several analysts downgraded shares of tobacco products giant.
So what
To justify his downgrade, Spielman argued that e-cigarette maker Juul is "beginning to disrupt the U.S. cigarette industry." As such, when Altria reports earnings next week, he believes it will confirm that industry volumes declined around 6% in the first quarter -- a trend that will mean Altria's valuation remains "depressed."
Now what
The bar isn't set particularly high, as investors expect Altria's quarterly sales will climb less than 1% from the same year-ago period, to roughly $4.62 billion. Thanks in part to tight cost controls, though, Altria's earnings per share are expected to simultaneously climb around 26%, to $0.92.
How much revenue does Altria have?
A] Revenue Growth. Altria has seen only a modest rise of $0.5 billion in revenues over the last three years, with net revenue growing from $19.3 billion in 2016 to $19.8 billion in 2019. However, growth is likely to accelerate to $20.2 billion in 2020, led by higher revenue from heated tobacco products, benefiting from JUUL and Cronos acquisitions, ...
Is Altria going to increase its prices?
However, Altria has resorted to price increases to avoid a sharp decline in revenue. Revenue from the smokeless products division is expected to increase in the near future, driven by higher volume, along with premium pricing and partial phasing out of promotional investments and discounts.
Is Juul a crackdown?
The FDA crackdown on e-cigarettes and many states in the US banning flavored e-cigarettes is expected to hit JUUL the hardest, which has led to the value of Altria’s investment in JUUL dropping by about $8.6 billion in a year. Total expenses as a % of revenue has continuously increased with the rise being sharp in 2019.
How much of Altria owns Philip Morris?
The deal, which has long been speculated about by analysts and investors, would give Philip Morris approximately 58% ownership of the combined company, while Altria would own the other 42%.
Who is the analyst for Wells Fargo?
According to MarketWatch, Wells Fargo analyst Bonnie Herzog said that "there will be tremendous value" if a deal happens and that Phillip Morris will be able to "capture the full margin and accelerate the growth of iQOS in the U.S. given its full control over sales and distribution.".
How much money has Philip Morris invested in IQOS?
Philip Morris has plowed more than $6 billion into iQOS, a device that heats tobacco-filled sticks wrapped in paper, producing an aerosol containing nicotine.
How much is the e-cigarette market worth?
The e-cigarette market was worth around $11 billion in 2018 and is expected to grow at a more-than 8% annual pace over the next five years.
Does Altria own Juul?
But Altria also has made its own e-cigarette investments. The company has invested $12.8 billion for a 35% stake in Juul, the biggest e-cigarette firm in the U.S. Juul, whose e-cigarette vaporizes a nicotine-filled liquid, leads the e-vapor product market with an approximate 18% share of total retail sales value.
Is Altria a tobacco company?
Altria remained focused on the U.S. domestic market, selling its Marlboro cigarettes, while Philip Morris centered its tobacco business on markets abroad. At the time the two companies bid farewell, cigarette sales were dwindling in the U.S. while increasing overseas. But since 2012, sales started to decline internationally.
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Summary
Altria's share price is down, but that does not mean the company is running into problems.
Thesis
Altria ( MO) has seen its share price decline over the last couple of years, but that was not based on crashing earnings or cash flows. Instead, it was purely driven by valuation. Altria's underlying performance has been solid over the last couple of years, including during the current pandemic.
Altria's Price Is Down - The Only Issue It Has Experienced
I recently read an article here on Seeking Alpha that argues that Altria was collapsing. In that report, author Income Generator argues that the company's weak share price performance over the last couple of years was caused by its weak performance, the JUUL investment going south, and problems during the pandemic.
Altria And The Current Crisis
Some bearish investors argue that Altria was running into problems due to the current crisis (pandemic and recession), but I don't think that belief is justified when we look at a couple of relevant factors.
Takeaway
Altria's investment in JUUL seems ill-timed in retrospect, but the cash for that acquisition has been paid a long time ago, and any asset writedowns during 2020 or in the future will be a non-cash item.
One Last Word
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