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Here's What You Must Note Ahead of Altria's (MO) Q1 Earnings

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Altria Group, Inc. (MO - Free Report) is scheduled to release first-quarter 2020 results on Apr 30. The tobacco giant delivered a positive earnings surprise of close to 1% in the last reported quarter. However, it has underperformed the Zacks Consensus Estimate for earnings by 1.6%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 97 cents per share, which suggests an increase of 7.8% from the figure reported in the year-ago quarter. The consensus mark has dropped 2% in the past 30 days. The consensus mark for revenues stands at $4,619 million, indicating an increase of 5.3% from the year-ago period’s 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 gaining from its strong pricing, which boosted adjusted OCI growth in both smokeable and smokeless segments in the last reported quarter. It is seen that smokers tend to absorb price increases owing to the addictive quality of cigarettes. Notably, strong pricing has been helping the company in the face of declining cigarette volumes.

Well, Altria has long been struggling with weak shipment volumes in the smokeables unit. Cigarette shipment volumes are being 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. To this end, the U.S. Food and Drug Administration (FDA) made it mandatory for tobacco companies to use precautionary labels on cigarette packets to dissuade customers from smoking. In fact, per court orders, cigarette makers have been made to put up self-critical advertisements on television and newspapers to dissuade customers from smoking. The FDA is also bent on drastically reducing nicotine in cigarettes to minimally addictive levels.

Nevertheless, revenues from reduced risk products (RRPs) or Smokeless tobacco products have been a driver. We note that revenues from the Smokeless product category have been steadily rising. Altria is undertaking dedicated endeavors to bolster presence in the RRPs space. In this respect, the sale of IQOS in the United States through a licensing deal with Phillip Morris (PM) and the commercialization of on! bode well. Apart from this, Altria’s focus on cost reduction has been a driver.

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 carries a Zacks Rank #3 and has an Earnings ESP of +0.43%.

Other Stocks With Favorable Combinations

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

Hain Celestial (HAIN - Free Report) has an Earnings ESP of +9.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Church & Dwight (CHD - Free Report) currently has an Earnings ESP of +3.56% and a Zacks Rank #2.

Kellogg (K - Free Report) currently has an Earnings ESP of +3.23% and a Zacks Rank of 2.

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