Altria (MO, $48.44) forecasts slowing cigarette volumes, and hints at uncertainty over Juul
On Tuesday, Altria Group reported second-quarter adjusted earnings that was almost in line with analysts' expectations. However, the cigarette maker warned that cigarette sales declines are worsening, and also expressed current uncertainty on Juul’s international expansion.
Excluding special items such as litigation, costs associated with Altria's investment in Anheuser-Busch InBev and its stake in Canadian cannabis producer Cronos, Altria’s earnings came in at $1.10 a share for the quarter, almost matching the consensus estimate of analysts polled by FactSet.
The company's total sales climbed +5.5% year-over-year to $5.19 billion in the quarter, surpassing analysts’ expectations of $5.09 billion.
Altria also affirmed its projection of full-year adjusted earnings of between $4.15 and $4.27 a share.
However, the company indicated that U.S. cigarette volumes would decline between -5% and -6% this year, as cigarette smokers switch to e-cigarettes. Its prior forecast of the decline was -3.5% to -5%.
Altria also revised its expectations of total domestic cigarette industry volumes decline to -4% to -6% through 2023, compared to the previously forecast range of -4% to -5%. The company feels that part of this can be attributed to 18 states raising the permissible smoking age to 21.
Apparently in a bid to capitalize on the growing e-cigarette market, Altria invested $12.8 billion last year for a 35% stake in e-cigarrette startup Juul. Altria is hoping for Juul’s international growth to boost business, but Altria CEO Howard Willard said it’s “too soon” to judge the outcome. Meanwhile, e-smoking apparently continues to face scrutiny in various parts of the world for its burgeoning popularity among teenagers.
Other recent instances of product-portfolio diversification of the Marlboro-maker include its $1.8 billion investment for a 45% stake in Canadian cannabis company Cronos earlier this year , and its $372 million spending for oral nicotine pouch brand On.
Altria will also begin selling heated tobacco product iQOS, in the U.S. this summer. Philip Morris International will license the device to Altria. The Food and Drug Administration earlier this year gave its approval on iQOS sales in the U.S.
MO in +0.26% Uptrend, rising for three consecutive days on November 29, 2024
Moving higher for three straight days is viewed as a bullish sign. Keep an eye on this stock for future growth. Considering data from situations where MO advanced for three days, in of 358 cases, the price rose further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
MO moved above its 50-day moving average on October 31, 2024 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for MO crossed bullishly above the 50-day moving average on November 04, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 18 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 291 cases where MO Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The 10-day RSI Indicator for MO moved out of overbought territory on December 03, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 38 similar instances where the indicator moved out of overbought territory. In of the 38 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 58 cases where MO's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for MO turned negative on December 03, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 45 similar instances when the indicator turned negative. In of the 45 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where MO declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
MO broke above its upper Bollinger Band on October 31, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (0.000) is normal, around the industry mean (3.273). P/E Ratio (9.535) is within average values for comparable stocks, (12.991). MO's Projected Growth (PEG Ratio) (3.966) is slightly higher than the industry average of (1.970). Dividend Yield (0.070) settles around the average of (0.058) among similar stocks. MO's P/S Ratio (4.815) is slightly higher than the industry average of (1.813).
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 73, placing this stock better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. MO’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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General Information
a holding company which produces and markets tobacco products
Industry Tobacco