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Factors to Know Ahead of Altria's (MO) Q4 Earnings Release

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Altria Group, Inc. (MO - Free Report) is likely to report growth in the top line when it releases fourth-quarter 2020 numbers on Jan 28. The Zacks Consensus Estimate for revenues is pegged at $4.9 billion, which suggests a rise of 2.2% from the figure reported in the prior-year quarter. For 2020, the consensus mark stands at roughly $20.7 billion.

The Zacks Consensus Estimate for the fourth-quarter bottom line has risen by a cent in the past 30 days to $1.01 per share, which however indicates a decrease of nearly 1% from the year-ago quarter’s reported figure. Notably, Altria’s bottom line has outperformed the Zacks Consensus Estimate by 3.5% in the last reported quarter, and it has a trailing four-quarter earnings surprise of 4.9%, on average. For 2020, the consensus mark for earnings is currently pegged at $4.38 per share, which suggests growth of 3.8% from the year-ago reported figure.

Altria Group, Inc. Price, Consensus and EPS Surprise

Altria Group, Inc. Price, Consensus and EPS Surprise

Altria Group, Inc. price-consensus-eps-surprise-chart | Altria Group, Inc. Quote

Key Factors to Note

Altria has been benefiting from its strong pricing even amid declining cigarette volumes. While 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. We note that in the third quarter of 2020, higher pricing boosted revenues and adjusted operating companies income (OCI) in both Smokeable Products and Oral Tobacco Products segments. In fact, solid pricing has been aiding Altria in battling soft cigarette volumes in the Smokeable Products segment.

We note that the company has long been struggling with weak shipment volumes in the Smokeable Products unit. Cigarette shipment volumes, in general, have been adversely impacted by anti-tobacco campaigns and increased consumer awareness regarding the harmful impacts of tobacco consumption. Regulatory hurdles are also a vital factor limiting the marketing of cigarettes, thereby adversely impacting its sales volume. Per the last earnings call, Altria still expects domestic cigarette industry volumes to have remained soft in 2020, although the rate of decline is likely to be lower than before. Apart from this, the company’s wine business is likely to have remained under pressure due to the pandemic-led restrictions on dining and gatherings.

Nonetheless, Altria’s focus on bolstering its Oral Tobacco Products business, given consumers’ rising inclination toward low-risk products, has been yielding results. Growth in the noncombustible business has been largely backed by the launch of IQOS as well as the commercialization of the oral tobacco-derived nicotine (TDN) pouch product — on! Notably, on! was sold in 56,000 stores by the end of the third quarter of 2020, reflecting a 40% rise from the second quarter. Additionally, Altria has been undertaking efforts to expand in the cannabis industry.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Altria this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Altria currently has a Zacks Rank #3 and an Earnings ESP of +0.14%.

Other Stocks With Favorable Combinations

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season.

Newell Brands (NWL - Free Report) has an Earnings ESP of +2.70% and a Zacks Rank #1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Monster Beverage (MNST - Free Report) has an Earnings ESP of +21.81% and a Zacks Rank #2, at present.

Estee Lauder (EL - Free Report) currently has an Earnings ESP of +0.55% and a Zacks Rank #3.

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