All things considered, could be worse. After Philip Morris International Inc. (Ticker NYSE:PM) delivered disappointing first quarter numbers last week, altria Group Inc (Ticker NYSE:MO) shareholders have been silently waiting to hear their quarterly dose of bad news Thursday morning. But, they don’t get it.
This does not mean that stock MO bulletproof. He’s still 26% since the middle of last year, and is knocking on the door of the lows, as the company runs out of ways to keep income propped up and to keep the profits growing.
Altria began to keep more and more plates while spinning, spitting movement, quitting Smoking, that’s just not going anywhere.
Income Altria Summary
For the quarter ended in March, altria has received an operating profit of 95 cents a share on revenue of $6.1 billion, compared to last year, topline a little less than $6.1 billion, when it shows a profit of just 73 cents per share. Adjusted earnings, which increased excise taxes, which make their products more expensive to buy, poured in 4.67 billion for the year increased by 2% per year or above $4.62 billion analysts had expected.
Perhaps most importantly, the profit exceeded the figure of 93 cents per share MO stock analysts are modeling for the first fiscal quarter of altria in 2018.
Earnings per share in MO an increase of 513 million dollars altria spent on buying eight million shares of altria group.
Sales of goods manufactured involves the Smoking of cigarettes less than a full percentage point year on year, with the increase in cigarette prices has largely offset the 4.2% dip in crude number of cigarettes shipping during the quarter. To regulate the movement of inventories, shipments declined by 7%.
Sales of smokeless tobacco products, meanwhile, grew by almost 13% yoy, but with a footnote… altria passed a voluntary recall of chewable tobacco products in the same quarter a year earlier, crimping sales in the first quarter of 2017.
CEO Marty Barrington said the results of the first quarter “altria is off to a fast start in strong year growth rate in earnings per share, which we followed, with adjusted diluted earnings per share, an increase of 30.1% in the first quarter of 2018… part of the reporting segment income reflects the terms previously announced investment for the long-term sustainability of the business.”
In the statement of income Group company altria and the market’s reaction to it — it was obvious that the rival of Philip Morris wrote a few days ago.
PM stocks fell last week by 4% after quite a a significant disadvantage of revenue and warning that demand in China is not as reliable as we would like. Stock MO too fell sharply, while, in step with Philip Morris tumbling, and a report Thursday says a headwind “Philip Morris” is not universally applicable in the industry.
And then there’s the 800 pound gorilla in the room, which is widely used… well-funded anti-tobacco industry, which continues to drag. Altria reported that in the domestic market, the industry volume of cigarettes decreased by 5.5%. Sales of smokeless tobacco products, by volume, was off 1%. On both fronts, the recent decline are part of a long trend.
Altria has managed to continue to increase top and bottom line, to his credit. A closer look at the details, though, it is clear that the main part of this top line growth resulted from acquisitions, while share buy-backs made the most significant increase in earnings per share. Cash flow and total revenue growth was stale and struggling for many years.
You can (not surprisingly) blame the headwind on the rise of electronic cigarettes. Altria has been and continues to address this market, but this market is currently dominated by a company called Juul laboratory.
It is also a market that is not very profitable. As Mad money Jim Cramer stated that first quarter, “Philip Morris”, “while tobacco companies can get into the vaping business, their own vape pens tend to be money losers. Who wanted to change an incredibly profitable business that lose money?”
Still, the cigarette giant is still a cash cow, paying a decent dividend it can afford to pay. It may be trade time limit on this but at the moment, its validity is further than most investors see.
Looking ahead for stock MO
For all of 2018 altria group, the company said it is now looking to post earnings between $3.90 and 4.03$, versus the consensus of $3.98. This figure may be well in 2017, and a total profit of $3.39 per share, while analysts had expected revenue will grow slightly less than 2% to 19.76 billion.
Revenue growth is expected to outpace sales growth, at least partly because the company is still a little more than $500 million left to spend earlier announced share buyback to $ 1 billion. Group altria forecasts that the remaining budget must be used before the end of 2018.
That consensus estimate of $3.98, $2.80 will be distributed as dividends, the newly-increased company altria payment. Which means dividend yield of approximately 5.0% considering the current stock price of altria group.
At the time of this writing, James Brumley does not occupy a position in any of the above securities. You can follow him on Twitter @jbrumley.