Altria Fell ~6% after Posting Disappointing Q1 Earnings

First-quarter performance

Altria Group (MO) posted its first-quarter earnings on April 25. For the quarter ended on March 31, the company reported adjusted EPS of $0.90, and revenues, net of excise tax, of $4.39 billion. Year-over-year, the company’s revenue declined by 6.0%, while its adjusted EPS fell 5.3%.

Altria Fell ~6% after Posting Disappointing Q1 Earnings

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Stock performance

Altria failed to meet analysts’ revenue and EPS expectations for the first quarter. Analysts were expecting the company to post adjusted EPS of $0.92 on revenues of $4.59 billion. The decline of 14.3% in Altria’s domestic cigarette shipment volume has lowered the company’s revenue. The company’s management has blamed unfavorable inventory movements, one less day of shipments, and higher gas prices for the decline in revenue. After posting its first-quarter results, the company’s management lowered its domestic cigarette industry volume estimate for 2019. Management is now expecting the domestic cigarette industry volume to decline in the range of 4% to 5%. The lower-than-expected first-quarter performance and the lowering of the total domestic cigarette industry volume estimate for 2019 appear to have led to a fall in the company’s stock price. As of April 25, Altria was trading at $51.41, which represents a fall of 6.0% from its previous day’s closing price.

Year-to-date performance

Since the beginning of this year, Altria’s stock price has increased by 4.1%. During the same period, peers Philip Morris International (PM) and British American Tobacco (BTI) have returned 25.2% and 20.0%, respectively. The broader comparative index, the Consumer Staples Select Sector SPDR ETF’s (XLP), which invests in cigarettes and tobacco companies, has returned 11.8%.