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Altria’s Valuation Multiple Compared to Its Peers

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Valuation multiple

Altria Group (MO) posted its first-quarter earnings on April 25. The company didn’t meet analysts’ revenue and EPS expectations for the quarter. Read Altria Down ~6% after Posting Disappointing Q1 Earnings to learn more.

On May 28, CNBC reported that data collected from Nielsen indicated a fall of 6.9% in cigarette sales by value. In volume, cigarette sales fell 11.2% during the four weeks ending on May 18. Altria’s weak first-quarter performance, Nielsen’s report, and Scott Gottlieb’s comment on June 21 likely caused Altria stock to fall 12.3% since the announcement of its first-quarter earnings. The decline in Altria’s stock price has lowered its valuation multiple. As of June 21, the company was trading at a forward PE ratio of 11.1x—compared to 12.8x before its first-quarter earnings were announced.

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In the above graph, you can see that Altria Group has been trading below Philip Morris International (PM). Increased regulations in the US and the acquisition of 35% in Juul Labs for $12.8 billion caused Altria stock to fall and trade below Philip Morris’s valuation multiple. On June 21, Philip Morris was trading at a forward PE ratio of 14.8x.

Analysts’ recommendations

Among the 17 analysts that follow Altria, 47.1% recommended a “buy,” 35.3% recommended a “hold,” and 17.6% recommended a “sell.” Analysts have given Altria a 12-month target price of $58.73, which implies a return potential of 22.4% from its stock price of $48.

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