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.
Altria's (MO) Pricing & Smoke-Free Strength Aid Amid Hurdles
Read MoreHide Full Article
Altria Group, Inc. (MO - Free Report) is well-positioned to benefit from its smoke-free product lineup and pricing power. The company's robust performance in the second quarter of 2023 demonstrated its resilience amid cost inflation and soft cigarette volumes.
Pricing Power
Altria’s pricing power has helped it stay firm, even amid soft cigarette shipment volumes. Though higher pricing might lead to a possible decline in cigarette consumption, it is seen that smokers tend to absorb price increases due to the addictive quality of cigarettes.
In the second quarter of 2023, higher pricing offered respite to revenues across the Smokeable Products and Oral Tobacco categories, which were otherwise hurt by lower volumes. Higher pricing aided the adjusted operating companies income (OCI) in both segments.
Image Source: Zacks Investment Research
A Shift Toward Smoke-Free Products
There has been a general shift among consumers toward several reduced-risk products (RRPs) or smoke-free products due to the serious health hazards of smoking cigarettes. Altria has been responding to the changing market scenario by offering several oral tobacco, e-vapor and heated tobacco products. Net revenues in the Oral Tobacco Products segment rose 2.3% year over year to $680 million in the second quarter of 2023.
MO (through its subsidiary Helix Innovations) has full global ownership of on! — a popular tobacco-derived nicotine (TDN) pouch product — which is gaining popularity in the United States due to its low-risk claims. Altria continues to expand the manufacturing capacity and the commercial availability of the product. In the second quarter, on! reported shipment volumes grew roughly 50%.
Within the smoke-free category, management is exploring ways to best compete in the significant e-vapor category. Per the second-quarter earnings call, e-vapor remains the biggest smoke-free category in the United States as it is the most successful in shifting smokers away from cigarettes. The acquisition of NJOY Holdings is noteworthy in this respect, with NJOY ACE being the only pod-based e-vapor product with marketing authorization from the FDA at present.
Altria concluded the buyout of NJOY Holdings, Inc on Jun 1, 2023. Management remains committed to implementing its commercial agenda for NJOY in the second half of 2023.
Cigarette Volume Concerns
In its second-quarter earnings release, management stated that the overall cigarette industry has been bearing the brunt of the inflationary environment, which has affected Adult Tobacco Consumers’ (“ATC”) spending patterns. As the external landscape remains dynamic, Altria continues assessing economic factors like elevated inflation, higher interest rates, global supply-chain hurdles and ATC dynamics, such as purchasing patterns, the adoption of smoke-free products and disposable income.
Cigarette volumes, in general, have also been affected by consumers’ rising health consciousness and a shift to low-risk tobacco alternatives. In the second quarter of 2023, net revenues in the Smokeable Products segment declined 30.9% year over year to $5,820 million due to the reduced shipment volume and increased promotional investments, partly compensated by greater pricing.
Domestic cigarette shipment volumes tumbled 8.7%, mainly due to the industry’s decline rate and retail share losses, partly countered by trade inventory movements. The industry’s decline and retail share losses were a result of macroeconomic pressure on ATC’s disposable income. On adjusting for trade inventory movements and other factors, the total estimated domestic cigarette industry volume fell an estimated 7.5%.
Wrapping Up
Altria appears well-placed, leveraging its pricing strategies and smoke-free product portfolio strength to navigate cigarette volume-related headwinds successfully. For the full-year 2023, the company envisions the adjusted EPS in the range of $4.89-$5.03, suggesting growth of 1-4% from the $4.84 recorded in 2022.
Shares of this Zacks Rank #3 (Hold) company have decreased 2.6% in the past year compared with the industry’s decline of 4.5%.
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13.5% and 184.5%, respectively, from the corresponding year-ago reported figures.
Inter Parfums (IPAR - Free Report) , which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently sports a Zacks Rank #1. IPAR has an expected EPS growth rate of 15% for three to five years.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Helen of Troy (HELE - Free Report) , a provider of several consumer products, currently has a Zacks Rank #2 (Buy). HELE’s expected EPS growth rate for three to five years is 8%.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Altria's (MO) Pricing & Smoke-Free Strength Aid Amid Hurdles
Altria Group, Inc. (MO - Free Report) is well-positioned to benefit from its smoke-free product lineup and pricing power. The company's robust performance in the second quarter of 2023 demonstrated its resilience amid cost inflation and soft cigarette volumes.
Pricing Power
Altria’s pricing power has helped it stay firm, even amid soft cigarette shipment volumes. Though higher pricing might lead to a possible decline in cigarette consumption, it is seen that smokers tend to absorb price increases due to the addictive quality of cigarettes.
In the second quarter of 2023, higher pricing offered respite to revenues across the Smokeable Products and Oral Tobacco categories, which were otherwise hurt by lower volumes. Higher pricing aided the adjusted operating companies income (OCI) in both segments.
Image Source: Zacks Investment Research
A Shift Toward Smoke-Free Products
There has been a general shift among consumers toward several reduced-risk products (RRPs) or smoke-free products due to the serious health hazards of smoking cigarettes. Altria has been responding to the changing market scenario by offering several oral tobacco, e-vapor and heated tobacco products. Net revenues in the Oral Tobacco Products segment rose 2.3% year over year to $680 million in the second quarter of 2023.
MO (through its subsidiary Helix Innovations) has full global ownership of on! — a popular tobacco-derived nicotine (TDN) pouch product — which is gaining popularity in the United States due to its low-risk claims. Altria continues to expand the manufacturing capacity and the commercial availability of the product. In the second quarter, on! reported shipment volumes grew roughly 50%.
Within the smoke-free category, management is exploring ways to best compete in the significant e-vapor category. Per the second-quarter earnings call, e-vapor remains the biggest smoke-free category in the United States as it is the most successful in shifting smokers away from cigarettes. The acquisition of NJOY Holdings is noteworthy in this respect, with NJOY ACE being the only pod-based e-vapor product with marketing authorization from the FDA at present.
Altria concluded the buyout of NJOY Holdings, Inc on Jun 1, 2023. Management remains committed to implementing its commercial agenda for NJOY in the second half of 2023.
Cigarette Volume Concerns
In its second-quarter earnings release, management stated that the overall cigarette industry has been bearing the brunt of the inflationary environment, which has affected Adult Tobacco Consumers’ (“ATC”) spending patterns. As the external landscape remains dynamic, Altria continues assessing economic factors like elevated inflation, higher interest rates, global supply-chain hurdles and ATC dynamics, such as purchasing patterns, the adoption of smoke-free products and disposable income.
Cigarette volumes, in general, have also been affected by consumers’ rising health consciousness and a shift to low-risk tobacco alternatives. In the second quarter of 2023, net revenues in the Smokeable Products segment declined 30.9% year over year to $5,820 million due to the reduced shipment volume and increased promotional investments, partly compensated by greater pricing.
Domestic cigarette shipment volumes tumbled 8.7%, mainly due to the industry’s decline rate and retail share losses, partly countered by trade inventory movements. The industry’s decline and retail share losses were a result of macroeconomic pressure on ATC’s disposable income. On adjusting for trade inventory movements and other factors, the total estimated domestic cigarette industry volume fell an estimated 7.5%.
Wrapping Up
Altria appears well-placed, leveraging its pricing strategies and smoke-free product portfolio strength to navigate cigarette volume-related headwinds successfully. For the full-year 2023, the company envisions the adjusted EPS in the range of $4.89-$5.03, suggesting growth of 1-4% from the $4.84 recorded in 2022.
Shares of this Zacks Rank #3 (Hold) company have decreased 2.6% in the past year compared with the industry’s decline of 4.5%.
Solid Consumer Staple Bets
Post Holdings (POST - Free Report) , a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 59.6% on average. You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13.5% and 184.5%, respectively, from the corresponding year-ago reported figures.
Inter Parfums (IPAR - Free Report) , which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently sports a Zacks Rank #1. IPAR has an expected EPS growth rate of 15% for three to five years.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Helen of Troy (HELE - Free Report) , a provider of several consumer products, currently has a Zacks Rank #2 (Buy). HELE’s expected EPS growth rate for three to five years is 8%.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.