28 Dec

What Analysts Expect for Altria’s Revenue

WRITTEN BY Rajiv Nanjapla

Revenue sources

Altria Group (MO) earns its revenue from four segments: smokeable products, smokeless products, wine, and others. In 3Q17, the smokeable segment generated 86.1% of its revenue, while the smokeless, wine, and other segments generated 10.1%, 3.4%, and 0.4% of its revenue, respectively.

What Analysts Expect for Altria’s Revenue

Revenue expectations

In the next four quarters, analysts expect Altria to post revenue of $19.9 billion, 2.1% growth from the $19.5 billion seen in the last four quarters. The growth is expected to be driven by product innovations and higher Nat Sherman and MarkTen sales and product prices. The company acquired super-premium cigarette brand manufacturer Nat Sherman in January 2017.

Altria increased Philip Morris USA prices by $0.10 per pack in September 2017, and $0.08 per pack in March 2017. Middleton prices were increased by $0.10 per five-pack in May 2017, and Parliament was increased by $0.12 per pack in March 2017. These price increases are expected to boost the company’s revenue.

To meet customers’ increasing demand and to comply with the FDA’s strict regulations, the company continues to focus on the development of reduced-risk tobacco products under its MarkTen flagship. In 3Q17, MarkTen’s national retail share increased to 13.5% in mainstream channels due to expanded distribution and category growth. The company announced that it was expanding the distribution of MarkTen Bold to 15,000 stores in 4Q17. These initiatives are expected to contribute to Altria’s revenue growth.

Also, the FDA is currently reviewing a modified risk tobacco product application for iQOS, which was submitted by Philip Morris International (PM) in association with Altria. On approval, Altria will receive exclusive rights to market the product in the United States.

Peer comparison

In the next four quarters, Philip Morris International (PM) is expected to post revenue of $31.2 billion, which represents 13.8% growth from the $27.4 billion seen in the last four quarters. Next, we’ll look at analysts’ earnings expectations for the next four quarters.

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