Altria Stock Fell after Its Q1 Results

Stock performance

Altria Group (MO) posted lower-than-expected first-quarter results on April 25. The results might have led to a fall in the company’s stock price. In pre-market trading on April 25, Altria was trading ~4.4% down.

After falling 30.8% last year, Altria has delivered a positive return this year. The company has returned 10.8% YTD (year-to-date) as of April 24. Investors’ optimism surrounding Altria’s investment in Cronos Group (CRON) and Juul Labs appears to have caused Altria’s stock price to rise. During the same period, British American Tobacco (BTI) and Philip Morris International’s (PM) stock prices have increased 23.4% and 26.5%, respectively. The broader comparative index, the Consumer Staples Select Sector SPDR ETF (XLP) has returned 12.5%, YTD.

Altria Stock Fell after Its Q1 Results

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Valuation multiple

The increase in Altria’s stock price since the beginning of this year has also raised its valuation multiple. As of April 24, the company was trading at a forward PE ratio of 12.8x compared to 11.5x at the beginning of this year. On the same day, Philip Morris was trading at a forward PE ratio of 16.0x.

Outlook

For 2019, Altria’s management has maintained its EPS guidance at $4.15–$4.27, which implies a rise of 4%–7% from $3.99 in 2018. Due to an increase in gas prices and other factors, Altria’s management expects the total domestic cigarette industry volume to fall 4%–5% this year.