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Altria’s Valuation Multiple Rose after Fourth-Quarter Earnings

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Forward PE multiple

The optimism surrounding Altria Group’s (MO) recent investments in Juul and Cronos Group (CRON) has led to a rise in Altria’s stock price, which in turn has raised its valuation multiple. As of January 31, Altria was trading at a forward PE multiple of 11.6x compared to 11.3x before the announcement of its fourth-quarter earnings. On the same day, Altria’s peer Philip Morris International (PM) was trading at a forward PE multiple of 14.5x.

Currently, Altria is trading at 11.7 times analysts’ 2019 EPS expectation of $4.22, and 11 times analysts’ 2020 EPS expectation of $4.49. Its EPS are expected to rise by 5.8% in 2019 and 6.3% in 2020.

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Analysts’ recommendations

There were no immediate rating changes from analysts after Altria posted its fourth-quarter earnings. Of the 19 analysts that follow Altria Group, 42.1% have given the stock a “buy” rating, while 31.6% are favoring a “hold,” and 15.8% are favoring a “sell.” On average analysts have set a price target of $57.22, which represents a return potential of 16.0% from its January 31 closing price of $49.35.

Peer comparisons

Of the 19 analysts that follow Philip Morris International (PM), 52.6% are favoring a “buy,” 36.8% are favoring a “hold,” and 10.5% are favoring a “sell” recommendation. On average, analysts have set a price target of $87.75, which represents an upside potential of 14.3% from its January 31 closing price of $76.72.

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