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Altria Has Fallen ~8.0% since Its Last Earnings: What’s Next?

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May. 31 2019, Published 6:05 a.m. ET

Stock performance

As of May 30, Altria Group (MO) was trading at $50.21—a fall of 8.2% since its first-quarter earnings on April 25. The company is trading at a discount of 24.0% from its 52-week high of $66.04. Altria is trading at a premium of 18.4% from its 52-week low of $42.40.

In the first quarter, Altria posted an adjusted EPS of $0.90 on net revenues of $4.39 billion, which fell short of analysts’ EPS estimate of $0.92 and revenue estimate of $4.59 billion. The company’s management blamed unfavorable inventory movements, one less day of shipments, and higher gas prices for the lower revenues. On May 28, CNBC reported that the data collected by Nielsen showed a fall of 6.9% in cigarette sales by value and a fall of 11.2% by volume during the four weeks ending on May 18. The lower volumes were sharper than Altria’s forecast of 4%–5%. Altria’s shrinking core business and weak first-quarter performance appear to have led to a fall in its stock price.

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YTD performance

Despite the recent fall in Altria’s stock price, the company was trading 1.7% higher YTD (year-to-date). However, the company has been lagging the broader equity market and its peers this year. The S&P 500 Index has returned 11.2% YTD, while Philip Morris International (PM) and British American Tobacco (BTI) have returned 19.2% and 11.8%, respectively.

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