Altria Group (MO) announced its 3Q16 earnings on October 27, 2016. The company posted net revenue, excluding excise taxes, of $5.2 billion and EPS (earnings per share) of $0.56.
However, its adjusted EPS, excluding the impact of special items, stood at $0.82. Compared to 3Q15, the company’s revenue rose 4.3%, while its adjusted EPS rose 9.3%.
Analysts were expecting the company to post adjusted EPS of $0.81 on net revenue of $5.1 billion. The improvement in cigarette shipment volumes and the expansion of its margins helped the company to post higher earnings.
These better-than-expected earnings increased investors’ confidence in Altria, leading to a rise in its share price. On October 28, 2016, Altria was trading at $65.9, a rise of 2.1% from its October 26, 2016, closing price.
In 2015, Altria returned 17.2%. 2016 has also been a good year for Altria. Year-to-date, the company’s share price has risen 14.8%. During the same period, Altria’s peers Philip Morris International (PM) and Reynolds American (RAI) have returned 10.7% and 21.1%, respectively.
By comparison, the broader comparative index, the First Trust Morningstar Dividend Leaders Index ETF (FDL), has returned 12.6% year-to-date. FDL has 12.8% of its holdings invested in tobacco and cigarette companies.
In this series, we’ll be taking a look at Altria’s 3Q16 performance. We’ll compare it with the company’s performance in the same quarter last year. We’ll also explore the factors that could drive the company’s revenue, margins, and EPS in the coming quarters. Finally, we’ll look at the company’s valuation multiple and analysts’ estimates and recommendations going forward.
Let’s start by looking at Altria’s 3Q16 revenue.