Altria Group (MO) is scheduled to announce its 3Q17 earnings before the market opens on October 26, 2017. On October 18, 2017, the stock was trading at $64.81, which represents a fall of 9.6% since the announcement of its 2Q17 earnings on July 27, 2017.
Although Altria posted better-than-expected 2Q17 revenue, the stock price of the company declined due to the FDA’s (US Food and Drug Administration) announcement on July 28, 2017, that it would be working on lowering nicotine to non-addictive levels in cigarettes.
Cigarette manufacturing companies enjoy greater pricing power and stable revenues due to the addictive nature of these products. However, investors fear that the implementation of the proposal could lead to a decline in smoking and lower the pricing power of the companies.
For Altria, 2017 has been a tough year. The company’s stock price has fallen 4.2% since the beginning of 2017. During the same period, Philip Morris International (PM) and British American Tobacco (BTI) have returned 23.0% and 13.6%, respectively.
Notably, the First Trust Morningstar Dividend Leaders Index Fund (FDL) and the S&P 500 Index (SPX)—the broader indexes—have returned 5.3% and 14.4%, respectively. FDL has 7.4% of its total portfolio in tobacco and cigarette companies.
With Altria’s 3Q17 earnings around the corner, we’ll be analyzing the analysts’ estimates for Altria’s revenue, margins, and earnings. We’ll also cover the management’s 2017 guidance and the analysts’ estimates for the next four quarters, wrapping up the series by looking at the company’s valuation multiple and the analysts’ recommendations for the stock.
We’ll begin by looking at the analysts’ estimates for Altria’s revenues for 3Q17.