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Altria Group Inc. (MO - Analyst Report) is set to report first-quarter fiscal 2014 results on Apr 24. Last quarter, the company posted a negative surprise of 1.7%. Let's see how things are shaping up for this announcement.

Factors to Consider This Quarter

Altria has been witnessing declining volumes for the past few quarters due to growing awareness against tobacco products. Worldwide anti-tobacco campaigns and consciousness among people against the harmful effects of tobacco are shifting consumer preference away from cigarettes and other traditional tobacco products.

Accordingly, the company has been reporting soft top lines in both the smokeable and smokeless segments for the past few quarters because of the ongoing industrial headwinds discussed above. We do not expect these conditions to improve in the quarter. Earnings of the company have been growing regularly only due to tailwinds from lower excise tax and share buybacks – suggesting lack of significant growth in the core business.

Moreover, e-cigarettes are now being considered by both the French and EU governments as tobacco products which face the same restrictions as other such products. These developments are expected to further hurt volumes of the tobacco companies.

Earnings Whispers?

Our proven model does not conclusively show that Altria is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimate. However, that is not the case here due to the following factors:

Negative Zacks ESP: ESP for Altria is -1.75%. This is because the Most Accurate estimate stands at a loss of 56 cents a share, while the Zacks Consensus Estimate is pegged at a loss of 57 cents.

Zacks Rank #4 (Sell): We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies that investors may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Coca Cola Enterprises Inc. (CCE - Analyst Report), Earnings ESP of +2.27% and a Zacks Rank #2 (Buy).

The Cheesecake Factory Inc. (CAKE - Analyst Report), Earnings ESP of +2.04% and a Zacks Rank #3.

Church & Dwight Co. Inc. (CHD - Snapshot Report), Earnings ESP of +1.37% and a Zacks Rank #3.

Read the Full Research Report on MO
Read the Full Research Report on CAKE
Read the Full Research Report on CCE
Read the Full Research Report on CHD


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