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.
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.
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.