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Is Altria Group (MO) Poised for a Beat This Earnings Season?
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Altria Group, Inc. (MO - Free Report) is set to report first-quarter 2017 results before the opening bell on May 2. The question lingering in investors’ minds is, whether this tobacco maker will be able to post a positive earnings surprise in the to-be-reported quarter. The company’s earnings exceeded the Zacks Consensus Estimate in all the trailing four quarters, with an average beat of 2.46%.
Let us see how things are shaping up for this announcement.
What Does the Zacks Model Unveil?
Our proven model shows that Altria is likely to beat earnings because it has the right combination of two key ingredients.
Zacks Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.35%.This is because the Most Accurate estimate is at 75 cents, while the Zacks Consensus Estimate is pegged lower at 74 cents. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Altria currently carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Altria’s Zacks Rank #3 and an Earnings ESP of +1.35% makes us very optimistic about a possible earnings beat.
Which Way Are Estimates Treading?
Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate for the first quarter has declined in the last 30 days, while remaining stable for 2017.
However, the Zacks Consensus Estimate of 74 cents per share for the first quarter reflects a year-over-year increase of 3.1%. Further, analysts polled by Zacks expect revenues of $4.68 billion for the said quarter, up 19.4% from the year-ago period.
Altria has been reporting upbeat earnings results since the last four consecutive quarters, on the back of company’s strong brand portfolio, shift to low-risk, smokeless tobacco products and strong pricing. The company’s flagship brand Marlboro has been performing well and have boosted market share of the company.
PM USA, Altria’s smokeable subsidiary invests continuously in improving the brand architecture of Marlboro and has upgraded its shopping website – marlboro.com – which provides engaging content directly to adult smokers through mobile devices. It is also trying to enhance the brand equity of the Marlboro brand and has offered Marlboro Slate, a bold menthol product in the Marlboro Black family.
Further, it has acquired Nat Sherman, in order to augment the smokeable segment. Nat Sherman’s premium, excellent and differentiated brand portfolio, complements the brands in Altria's smokeable products segment.
In response to the changing market scenario, the company is also shifting toward low-risk, smokeless tobacco products. Its flagship MarkTen e-cigarette brand (launched in 2014) and Green Smoke e-vapor products are some of the examples. MarkTen XL – a variant on MarkTen launched by the company in 2016 have been encouraging in lead markets.
Altria’s agreement with another tobacco comany, Philip Morris International, Inc. (PM - Free Report) , under which the latter markets Altria’s MarkTen e-cigarettes internationally and the Altria distributes two of Philip Morris’ heated tobacco products in the U.S. is boosting business of both the companies.
Further, the recent takeover of SABMiller by Anheuser-Busch InBev's helped Altria maximize the value of its SABMiller investment. It helped to reward shareholders with an expanded share repurchase program, and enhanced position in the global brewing profit pool.
However, we believe strict anti-smoking regulations in the form of restrictions on packaging and high excise duties along with declining cigarette volumes remain major headwinds. Nevertheless, Altria has the potential to remain afloat and generate revenues with higher cigarette pricing in the face of unfavorable tax environment and declining cigarette volumes. Though higher pricing might lead to a possible decline in cigarette consumption, it is seen that smokers tend to absorb price increases owing to the addictive quality of cigarettes.
A glimpse of Altria’s stock performance shows that its shares have been outperforming the broader Consumer Staples sector since the past six months. The stock rallied 12.4% in comparison to the above mentioned sector’s growth of 4.4%. Per the latest Earnings Preview, the earnings growth for the sector looks decent. While total earnings for the Consumer Staples sector are estimated to rise 2.4%, revenues are projected to improve 4.0%.
Stocks to Consider
Here are some companies in the Consumer Staple sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Treehouse Foods, Inc. (THS - Free Report) has an Earnings ESP of +4.62% and a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
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Is Altria Group (MO) Poised for a Beat This Earnings Season?
Altria Group, Inc. (MO - Free Report) is set to report first-quarter 2017 results before the opening bell on May 2. The question lingering in investors’ minds is, whether this tobacco maker will be able to post a positive earnings surprise in the to-be-reported quarter. The company’s earnings exceeded the Zacks Consensus Estimate in all the trailing four quarters, with an average beat of 2.46%.
Let us see how things are shaping up for this announcement.
What Does the Zacks Model Unveil?
Our proven model shows that Altria is likely to beat earnings because it has the right combination of two key ingredients.
Zacks Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.35%.This is because the Most Accurate estimate is at 75 cents, while the Zacks Consensus Estimate is pegged lower at 74 cents. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Altria currently carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Altria’s Zacks Rank #3 and an Earnings ESP of +1.35% makes us very optimistic about a possible earnings beat.
Which Way Are Estimates Treading?
Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate for the first quarter has declined in the last 30 days, while remaining stable for 2017.
However, the Zacks Consensus Estimate of 74 cents per share for the first quarter reflects a year-over-year increase of 3.1%. Further, analysts polled by Zacks expect revenues of $4.68 billion for the said quarter, up 19.4% from the year-ago period.
Altria Group Price, Consensus and EPS Surprise
Altria Group Price, Consensus and EPS Surprise | Altria Group Quote
Factors Influencing the Quarter
Altria has been reporting upbeat earnings results since the last four consecutive quarters, on the back of company’s strong brand portfolio, shift to low-risk, smokeless tobacco products and strong pricing. The company’s flagship brand Marlboro has been performing well and have boosted market share of the company.
PM USA, Altria’s smokeable subsidiary invests continuously in improving the brand architecture of Marlboro and has upgraded its shopping website – marlboro.com – which provides engaging content directly to adult smokers through mobile devices. It is also trying to enhance the brand equity of the Marlboro brand and has offered Marlboro Slate, a bold menthol product in the Marlboro Black family.
Further, it has acquired Nat Sherman, in order to augment the smokeable segment. Nat Sherman’s premium, excellent and differentiated brand portfolio, complements the brands in Altria's smokeable products segment.
In response to the changing market scenario, the company is also shifting toward low-risk, smokeless tobacco products. Its flagship MarkTen e-cigarette brand (launched in 2014) and Green Smoke e-vapor products are some of the examples. MarkTen XL – a variant on MarkTen launched by the company in 2016 have been encouraging in lead markets.
Altria’s agreement with another tobacco comany, Philip Morris International, Inc. (PM - Free Report) , under which the latter markets Altria’s MarkTen e-cigarettes internationally and the Altria distributes two of Philip Morris’ heated tobacco products in the U.S. is boosting business of both the companies.
Further, the recent takeover of SABMiller by Anheuser-Busch InBev's helped Altria maximize the value of its SABMiller investment. It helped to reward shareholders with an expanded share repurchase program, and enhanced position in the global brewing profit pool.
However, we believe strict anti-smoking regulations in the form of restrictions on packaging and high excise duties along with declining cigarette volumes remain major headwinds. Nevertheless, Altria has the potential to remain afloat and generate revenues with higher cigarette pricing in the face of unfavorable tax environment and declining cigarette volumes. Though higher pricing might lead to a possible decline in cigarette consumption, it is seen that smokers tend to absorb price increases owing to the addictive quality of cigarettes.
A glimpse of Altria’s stock performance shows that its shares have been outperforming the broader Consumer Staples sector since the past six months. The stock rallied 12.4% in comparison to the above mentioned sector’s growth of 4.4%. Per the latest Earnings Preview, the earnings growth for the sector looks decent. While total earnings for the Consumer Staples sector are estimated to rise 2.4%, revenues are projected to improve 4.0%.
Stocks to Consider
Here are some companies in the Consumer Staple sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Pinnacle Foods Inc. has an Earnings ESP of +2.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Treehouse Foods, Inc. (THS - Free Report) has an Earnings ESP of +4.62% and a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>