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Why Altria Is Trading Close to Its 52-Week High

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Stock performance

On March 9, 2017, Altria Group (MO) hit its 52-week high of $76.44 and closed the day at $76.19. That represents a rise of 7.0% since it announced its 4Q16 earnings on February 1, 2017.

In 4Q16, analysts were expecting the company to post adjusted EPS (earnings per share) of $0.67 on net revenue of $4.8 billion. MO beat analysts’ EPS estimate with an adjusted EPS of $0.68. However, Altria’s 4Q16 revenue was lower than analysts’ estimate of $4.7 billion.

Earlier, on December 5, 2016, Altria, in partnership with Philip Morris International (PM), submitted a modified risk tobacco product application for its IQOS, an electronically heated tobacco product. On approval, Altria will receive exclusive rights to market the product in the United States.

Its better-than-expected 4Q16 earnings and the positive response to Philip Morris International’s (PM) RRPs (reduced risk products) in other markets appear to have increased investor confidence, leading to a rise in Altria stock.

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Year-to-date performance

It was a good year in 2016 for Altria Group, with its stock rising 16.2%. The company has also started 2017 on a bright note with its stock rising 12.7% year-to-date. Since the beginning of 2017, Altria’s peers Philip Morris International (PM) and Reynolds American (RAI) have risen 20.5% and 7.9%, respectively.

The broader comparative index, the First Trust Morningstar Dividend Leaders ETF (FDL), has risen 4.6% during the same period.

Series overview

In this series, we’ll be looking at analysts’ revenue and EPS estimates for Altria Group in 2017. We’ll also look at the company’s valuation multiple and analysts’ recommendations for the stock over the next 12 months.

Let’s start by looking at analysts’ revenue estimates for the company.

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