Why Altria’s 4Q17 Earnings Failed to Impress Investors



4Q17 performance

Altria Group (MO) posted its 4Q17 earnings before the market opened on February 1, 2018. Altria Group posted adjusted EPS (earnings per share) of $0.91 on net revenues of ~$4.7 billion. Compared to 4Q16, the company’s adjusted EPS rose 33.8%, and its net revenues declined 0.4%.

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Stock performance

In 4Q17, analysts expected Altria (MO) to post adjusted EPS of $0.80 on revenues of ~$4.8 billion. Although the company outperformed analysts’ EPS estimates, its revenues were lower than expected. The softness in sales of smokeable products led to a decline in Altria’s 4Q17 revenues.

Another factor that led to a fall in Altria’s stock price was the announcement that Marty Barrington, who served as Altria’s chairman and CEO for six years, plans to retire in May 2018. At the end of the day on February 1, 2018, Altria was trading at $69.93, which represents a fall of 0.63% from the previous day’s closing price.

Year-to-date performance

Since the beginning of 2018, Altria’s stock price has declined 2.1%. Its peers Philip Morris International (PM) and British American Tobacco (BTI) have returned -0.5% and 2.2% year-to-date, respectively.

The S&P 500 Index (SPX) and the Consumer Staples Select Sector SPDR ETF (XLP) have returned 5.5% and 1.2% year-to-date, respectively. XLP invests 13.5% of its holdings in cigarette and tobacco companies.

Series overview

In this series, we’ll examine Altria’s 4Q17 performance by comparing it with analysts’ estimates. We’ll look at its management’s 2018 guidance and analysts’ estimates for the next four quarters. We’ll end this series by looking at the company’s valuation multiple and analysts’ recommendations.

Let’s start by looking Altria’s 4Q17 revenues.


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