Altria (NYSE: MO) is expected to report its fourth quarter 2022 results on Thursday, January 26. We expect MO stocks to see little movement, with sales and earnings in line with street expectations. While the company should continue to see a drop in cigarette volume given the declining market and higher inflation, price growth will likely help to offset the loss of sales from volume. While we expect little movement in MO stock based on Q4 results, it has more room for growth from a valuation perspective, as discussed below. Our interactive dashboard analysis of Altria Earnings Preview has additional details.
(1) Expected revenues will match consensus estimates
- Trefis estimates Altria’s fourth-quarter 2022 revenues at approximately $5.2 billion, reflecting a low-single-digit year-over-year increase and in line with the consensus estimate of $5.2 billion.
- Altria sells its tobacco products in the US Revenues are generated from the sale of cigarettes, oral tobacco and smokeless products.
- While the company is expected to see continued price growth, lower volume/mix is likely to weigh on revenue growth.
- Looking at the third quarter of 2022, the company reported net sales of $5.4 billion, down 2% from the same quarter last year.
- The decrease in turnover can be attributed to a lower cigarette volume (-9%) and the sale of the wine activities in October 2021.
- Our dashboard on Altria earnings has details about the segments of the company.
(2) EPS is likely to be in line with consensus estimates
- Altria’s adjusted earnings per share (EPS) for the fourth quarter of 2022 is expected to be $1.17 per Trefis analysis, in line with the consensus estimate. This compares to the $1.07 figure the company reported in the previous quarter.
- The company’s net income of $2.3 billion in the third quarter of 2022 reflected a modest increase from the $2.3 billion figure in the prior year quarter due to operating margin growth of 90 basis points yoy up to 58.9%.
- For the full year 2023, we expect adjusted earnings per share to be higher at $5.11 compared to earnings per share of $4.61 in 2021 and an estimated $4.83 in 2022.
(3) MO stocks seem to have a little more room for growth
- We estimate Altria’s rating about $52 per share, which is 16% higher than the current market price of $45.
- At current levels, MO stock is trading at just under 9x its expected earnings per share of $5.11 in 2023, compared to its last three-year average of about 10x, implying some room for growth.
- If the company reports optimistic Q4 results and offers a better 2023 outlook than street estimates, the P/E multiple will likely be revised upwards, resulting in higher levels for MO stocks.
While the MO stock looks like it has some room for growth, it’s helpful to see how Altria’s colleagues rate on metrics that matter. Other valuable comparisons for companies in different industries can be found at Peer comparisons.
In addition, the Covid-19 crisis has led to many price discontinuities, which can provide attractive trading opportunities. For example, you’d be surprised how counterintuitive the stock valuation is to Ecolab vs. Phillip Morris.
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