We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Altria (MO) Up 6% Since the Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Altria Group (MO - Free Report) . Shares have added naerly 6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Altria’s Fourth-Quarter Earnings Beat, Revenues Miss Estimates
Altria Inc.’s fourth-quarter 2016 adjusted earnings of $0.68 per share beat the Zacks Consensus Estimate of $0.67 by a penny. Further, earnings increased 1.5% year over year driven by higher operating income and lower outstanding shares. The company also paid lower effective tax rate on operations driven by tax benefits associated with a dividend from AB InBev that was larger than the dividend received from SABMiller in the previous year.
Revenues and Margins
Net revenue dipped 1% to $6.3 billion during the quarter . Revenues net of excise taxes inched up 0.1% year over year to $4.7 billion. However, the top line missed the Zacks Consensus Estimate of $4.86 billion by 2.1% due to lower than expected volume in the smokeable segment.
Supported by lower excise tax levied on products, gross profit increased 3.9% year over year to $2.82 billion. Operating companies’ income advanced 3.3% to $2.1 billion.
Segment Details
Smokeable Products Segment: Net revenue edged down 1.9% year over year to $5.5 billion due to shift of consumer away from traditional tobacco products. Revenues net of excise taxes dipped 0.9% to $3.97 billion.
Shipment volume decreased 5% year over year to 29.5 billion units.
Cigarettes retail market share remained flat year over year as higher gains in Marlboro and Discount brands were offset by lower shares in Other Premium brands. Retail share for cigars dipped 0.8 percentage points (pp) due to lower shares at the Black and Mild brand.
Retail share for cigars dipped 1.3 pp due to lower shares at the Black and Mild brand.
Smokeless Products: Revenues jumped 7.2% to $521 million supported by higher pricing, partially neutralized by increased promotional investments. Revenues net of excise taxes increased 7.7% to $488 million during the quarter.
Smokeless Products’ shipment volume gained 2.2% to 213.1 million units buoyed by a 6.6% surge in Copenhagen and Skoal shipment volumes.
Smokeless Product’s retail share grew 0.8 pp year over year to 55.8%. Copenhagen brand’s retail share increased 2.4 pp, while Skoal witnessed a 1.3 pp dip.
Wine: The segment’s revenues went up 7.4% year over year to $248 million on the back of higher shipments. Revenues net of excise taxes increased 8.1% year over year to $240 million.
Wine shipment volume rose 4.2% to 3.1 million units driven by higher shipments of Ste. Michelle brand.
Full Year Results
Full year 2016 adjusted earnings of $3.03 per share met the Zacks Consensus Estimate and increased 8.2% year over year.
Net revenue slipped 1.2% to $25.7 billion. Revenues net of excise taxes climbed 2.6% year over year to $19.3 billion. The top line missed the Zacks Consensus Estimate of $19.8 billion.
Outlook
Altria issued guidance for full year 2017 and expects adjusted earnings in a range of $3.26–$3.32, up 7.5% to 9.5% compared with adjusted earnings of $3.03 in 2016. Altria expects that its 2017 full year effective tax rate on operations to be approximately 36%.
Financial Updates
Anheuser-Busch InBev took over SABMiller on Oct 10, 2016. Altria received a 9.6% ownership of AB InBev, and approximately $5.3 billion in pre-tax cash as per the terms of the acquisition. During 2016, Altria paid over $4.5 billion in dividends and repurchased over $1 billion of shares under an expanded $3 billion share repurchase program.
As of Dec 31, 2016, Altria had $4.56 cash and cash equivalents compared with $2.29 billion as of Sep 30, 2016. Long-term debt was $13.88 billion compared with $13.87 billion as of Sep 30, 2016.
In Aug 2016, Altria announced an 8% hike in its quarterly dividend to $0.61 per share. The new dividend was paid on Oct 11 to shareholders on record as of Sep 15, 2016. The annualized dividend now amounts to $2.44 per share with a dividend yield of 3.7%, based on Altria’s closing price of $66.33 as of Aug 19, 2016. Last year, the company increased its dividend by 8.7%.
Consolidation of Manufacturing Facilities
During the third quarter conference call, Altria announced that it will consolidate several of its manufacturing facilities to streamline operations and achieve greater efficiencies. The consolidation, scheduled to be completed by first-quarter 2018 is expected to deliver approximately $50 million in cost savings by the end of 2018.
E-Vapor Category in Focus
Altria’s subsidiary Nu Mark LLC (Nu Mark) stepped up the distribution of MarkTen XL and Green Smoke e-vapor products across several markets. Productivity Initiative
In Jan 2016, Altria announced the implementation of an initiative for approximately $300 million in annual productivity savings by the end of 2017. Part of the savings is to be realized through reduced spending on certain infrastructure and will be invested in brand building and regulatory capabilities. Such initiatives are expected to help the company reap higher profits over the long term.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two downward revisions for the current quarter.
At this time, Altria's stock has a poor Growth Score of 'F', though its Momentum is doing a lot better with an 'A'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for momentum investors, based on our styles scores.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions is a net zero. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Altria (MO) Up 6% Since the Last Earnings Report?
It has been about a month since the last earnings report for Altria Group (MO - Free Report) . Shares have added naerly 6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Altria’s Fourth-Quarter Earnings Beat, Revenues Miss Estimates
Altria Inc.’s fourth-quarter 2016 adjusted earnings of $0.68 per share beat the Zacks Consensus Estimate of $0.67 by a penny. Further, earnings increased 1.5% year over year driven by higher operating income and lower outstanding shares. The company also paid lower effective tax rate on operations driven by tax benefits associated with a dividend from AB InBev that was larger than the dividend received from SABMiller in the previous year.
Revenues and Margins
Net revenue dipped 1% to $6.3 billion during the quarter . Revenues net of excise taxes inched up 0.1% year over year to $4.7 billion. However, the top line missed the Zacks Consensus Estimate of $4.86 billion by 2.1% due to lower than expected volume in the smokeable segment.
Supported by lower excise tax levied on products, gross profit increased 3.9% year over year to $2.82 billion. Operating companies’ income advanced 3.3% to $2.1 billion.
Segment Details
Smokeable Products Segment: Net revenue edged down 1.9% year over year to $5.5 billion due to shift of consumer away from traditional tobacco products. Revenues net of excise taxes dipped 0.9% to $3.97 billion.
Shipment volume decreased 5% year over year to 29.5 billion units.
Cigarettes retail market share remained flat year over year as higher gains in Marlboro and Discount brands were offset by lower shares in Other Premium brands. Retail share for cigars dipped 0.8 percentage points (pp) due to lower shares at the Black and Mild brand.
Retail share for cigars dipped 1.3 pp due to lower shares at the Black and Mild brand.
Smokeless Products: Revenues jumped 7.2% to $521 million supported by higher pricing, partially neutralized by increased promotional investments. Revenues net of excise taxes increased 7.7% to $488 million during the quarter.
Smokeless Products’ shipment volume gained 2.2% to 213.1 million units buoyed by a 6.6% surge in Copenhagen and Skoal shipment volumes.
Smokeless Product’s retail share grew 0.8 pp year over year to 55.8%. Copenhagen brand’s retail share increased 2.4 pp, while Skoal witnessed a 1.3 pp dip.
Wine: The segment’s revenues went up 7.4% year over year to $248 million on the back of higher shipments. Revenues net of excise taxes increased 8.1% year over year to $240 million.
Wine shipment volume rose 4.2% to 3.1 million units driven by higher shipments of Ste. Michelle brand.
Full Year Results
Full year 2016 adjusted earnings of $3.03 per share met the Zacks Consensus Estimate and increased 8.2% year over year.
Net revenue slipped 1.2% to $25.7 billion. Revenues net of excise taxes climbed 2.6% year over year to $19.3 billion. The top line missed the Zacks Consensus Estimate of $19.8 billion.
Outlook
Altria issued guidance for full year 2017 and expects adjusted earnings in a range of $3.26–$3.32, up 7.5% to 9.5% compared with adjusted earnings of $3.03 in 2016. Altria expects that its 2017 full year effective tax rate on operations to be approximately 36%.
Financial Updates
Anheuser-Busch InBev took over SABMiller on Oct 10, 2016. Altria received a 9.6% ownership of AB InBev, and approximately $5.3 billion in pre-tax cash as per the terms of the acquisition. During 2016, Altria paid over $4.5 billion in dividends and repurchased over $1 billion of shares under an expanded $3 billion share repurchase program.
As of Dec 31, 2016, Altria had $4.56 cash and cash equivalents compared with $2.29 billion as of Sep 30, 2016. Long-term debt was $13.88 billion compared with $13.87 billion as of Sep 30, 2016.
In Aug 2016, Altria announced an 8% hike in its quarterly dividend to $0.61 per share. The new dividend was paid on Oct 11 to shareholders on record as of Sep 15, 2016. The annualized dividend now amounts to $2.44 per share with a dividend yield of 3.7%, based on Altria’s closing price of $66.33 as of Aug 19, 2016. Last year, the company increased its dividend by 8.7%.
Consolidation of Manufacturing Facilities
During the third quarter conference call, Altria announced that it will consolidate several of its manufacturing facilities to streamline operations and achieve greater efficiencies. The consolidation, scheduled to be completed by first-quarter 2018 is expected to deliver approximately $50 million in cost savings by the end of 2018.
E-Vapor Category in Focus
Altria’s subsidiary Nu Mark LLC (Nu Mark) stepped up the distribution of MarkTen XL and Green Smoke e-vapor products across several markets.
Productivity Initiative
In Jan 2016, Altria announced the implementation of an initiative for approximately $300 million in annual productivity savings by the end of 2017. Part of the savings is to be realized through reduced spending on certain infrastructure and will be invested in brand building and regulatory capabilities. Such initiatives are expected to help the company reap higher profits over the long term.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two downward revisions for the current quarter.
Altria Group Price and Consensus
Altria Group Price and Consensus | Altria Group Quote
VGM Scores
At this time, Altria's stock has a poor Growth Score of 'F', though its Momentum is doing a lot better with an 'A'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for momentum investors, based on our styles scores.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions is a net zero. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.