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Altria’s Valuation Multiple Compared to Its Peers

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Valuation multiple

The decline in Altria’s (MO) stock price due to the FDA’s announcement has also lowered its valuation multiple. As of April 3, the company was trading at a forward PE ratio of 12.7x—compared to 13.3x before the FDA’s announcement. On the same day, Philip Morris International (PM) was trading at a forward PE ratio of 15.6x.

In the above graph, you can see that Altria’s valuation multiple has fallen since the beginning of 2018. Increased anti-tobacco regulations, the decline in the cigarette shipment volume, and weakness in the broader equity market caused Altria’s stock price and valuation multiple to fall.

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Analysts’ estimates

For 2019, analysts expect Altria to post revenues of $19.85 billion—a rise of 1.1% from $19.63 billion in 2018. During the same period, analysts expect the company’s EPS to rise 5.2% to $4.20.

Analysts’ recommendations

Among the 17 analysts that cover Altria, 47.1% recommended a “buy,” 35.3% recommended a “hold,” and 17.6% recommended a “sell.” Analysts have set a 12-month target price of $58.47 for the stock, which represents an upside potential of 8.3% from its stock price of $53.98 on April 3.

Among the 20 analysts that follow Philip Morris, 55% recommended a “buy,” 30% recommended a “hold,” and 15% recommended a “sell.” Analysts’ 12-month target price is $90.94—a rise of 6.0% from its stock price of $85.81.

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