1Q17 earnings estimate
In 1Q17, Altria Group (MO) posted EPS (earnings per share) of $0.72. Removing special items, the adjusted EPS stood at $0.73—slightly lower than analysts’ estimate of $0.74. Altria’s adjusted EPS rose 1.4% from $0.72 in 1Q16.
Altria’s EPS growth was driven by revenue growth, margin expansion, and share repurchases in the last 12 months. However, some of the growth was lower due to a decline in equity earnings from Anheuser-Busch Inbev (BUD) investments. Due to the reporting lag, earnings from Anheuser-Busch in 4Q16 were included in Altria’s 1Q17 earnings. Anheuser-Busch’s earnings were impacted negatively by macroeconomic factors in Brazil and share-based compensations.
In the last 12 months, Altria repurchased shares worth $1.6 billion. By the end of 1Q17, the company had $1.38 billion under its share repurchase program. Share repurchases reduce the number of shares outstanding and boost the company’s EPS.
For the next four quarters, analysts expect Altria to post an adjusted EPS of $3.38, which represents 11.2% growth from $3.04 in the same quarters the previous year. The EPS growth is expected to be driven by revenue growth, margin expansion, and share repurchases. For 2017, Altria’s management set EPS guidance of $3.26–$3.32, which represents 7.5%–9.5% growth.
In the next part, we’ll look at Altria’s valuation multiple.