Back to top

Analyst Blog

Altria Inc.’s (MO - Analyst Report) adjusted earnings of 57 cents per share in the first quarter of 2014 were in line with the Zacks Consensus Estimate. The results, however, exceeded the prior-year quarter’s results by 5.6% backed by strong performance of core tobacco business and leading premium brands.

Revenues and Margins

Revenues, net of excise taxes, went up 0.9% year over year to $4.00 billion for the quarter due to revenue gains in the smokeless segment. Revenues missed the Zacks Consensus Estimate of $4.04 billion by 1%.

In the quarter, gross profit slipped 15.6% to $2.3 billion compared with the prior-year quarter due to higher cost of sales. Operating income slipped 19.0% year over year to $1.8 billion due to lower profit and higher marketing, administration and research cost.

Segment Details

Smokeable Products Segment: Revenues inched up 1.2% to $3.5 billion mainly due to market share gain of premium leading brands.

Shipment volume in the quarter declined 2.5% to 29.02 billion units compared with the prior-year quarter, primarily due to decline in cigarette shipment volume.

All the leading brands of Marlboro, L&M brands and Black & Mild reported a gain in market share during the quarter.

Adjusted operating income increased 6.4% year over year to $1.5 billion, reflecting higher pricing. Operating income margins inflated 2.2 percentage points (pp) to 44.1% during the quarter.

Smokeless Products: Revenues increased 5.8% to $385 million backed by higher shipment volume.

Smokeless products’ fourth-quarter shipment volume increased 5.9% to 186.1 million units mainly due to higher volume of Copenhagen and Skoal brands.

Although Copenhagen brand gained retail share by 1.5 pp during the quarter, Skoal witnessed a decrease in retail share by 1.3 pp primarily due to competitive activity.

Furthermore, adjusted operating companies’ income increased 7.7% year over year to $239 million backed by improved volume and pricing. Operating companies’ income margins 1.1 pp to 62.1%.

Wine: The segment’s revenues went up 2.5% year over year to $124 million on the back of improved premium mix. Wine shipment volume increased 1.1% to $1.7 million units, due to higher distribution of the 14 Hands brand.

Adjusted operating companies’ income went up 10.0% to $22 million on the back of positive pricing. Operating income margins shrank 1.2 pp to 17.7%.


During the first quarter of 2014, Altria repurchased approximately 7.5 million shares of for approximately $272 million.


Altria reaffirmed 2014 earnings guidance. It expects earnings in the range of $2.52 to $2.59, up 6% to 9% from $2.38 in 2013.

Altria expects 2014 earnings to benefit from lower interest expense, lower effective tax rate and lower share count due to the current share buyback program.

Altria carries a Zacks Rank #4 (Sell). Better-ranked stocks in the tobacco sector include Philip Morris International Inc. (PM - Analyst Report) and Lorillard Inc. (LO - Analyst Report) carrying a Zacks Rank #2 (Buy). Another stock performing well in the retail sector includes Supervalu Inc. (SVU - Analyst Report) carrying a Zacks Rank #2.

Read the Full Research Report on MO
Read the Full Research Report on SVU
Read the Full Research Report on PM
Read the Full Research Report on LO

Zacks Investment Research

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
PANTRY INC PTRY 21.02 +2.09%
INTEL CORP INTC 35.15 +1.88%
PIPER JAFFR… PJC 54.54 +1.70%