Jefferies’s upgrade of Altria Group (MO) appears to have boosted investors’ confidence, leading to a rise in the stock price. As of January 19, 2018, Altria was trading at $71.12, which represents a rise of 1.6% from its closing price the day prior.
In 2017, Altria returned 5.6%. During the year, the company’s stock price was impacted by the FDA’s announcement on July 28, 2017, that it was planning to reduce nicotine levels in cigarettes to non-addictive levels. Year-to-date, the stock has fallen 0.4%. In comparison, peers Philip Morris International (PM) and British American Tobacco (BTI) have returned 3.1% and 4.9, respectively, and the S&P 500 (SPX) and Consumer Staples Select Sector SPDR ETF (XLP) have returned 5.1% and 2.0%. XLP has invested 13.4% of its holdings in tobacco and cigarette companies.
During the next four quarters, analysts expect Altria to post revenue of $19.9 billion, which represents 2.1% growth from its revenue of $19.5 billion in the last four quarters. During the same period, the company’s EPS (earnings per share) are expected to rise 16.5% from $3.16 to $3.68.
As of January 19, 2018, Altria was trading at a forward PE (price-to-earnings) multiple of 18.6x, while peer Philip Morris International (PM) was trading at 19.9x. Valuation multiples help investors compare companies.