Following a strong earnings report, Altria Group, Inc.’s stock price hit a 52-week high at $55.09. The company’s NJOY shipments grew by 15%, proving the acquisition last year was a great strategic move. With a proven history of dividend increases and strategic capital allocation, the company continues to be a key player in the evolving tobacco sector.
Altria Group, Inc. is one of the leading American companies actively involved in the manufacture and sale of tobacco products. Incorporated in 1985, this tobacco company has its headquarters in Richmond, Virginia. Altria is the only company in its sector with a diverse portfolio of iconic brands and a stake in helping adult smokers switch to smoke-free alternatives. The company focuses on innovation and harm reduction to adapt to changing consumer preferences and evolving regulations.
Among Altria’s key offerings are cigarettes, including Marlboro; smokeless tobacco, such as Copenhagen and Skoal; e-vapor products, including NJOY; and machine-made large cigars, including Black & Mild. The company earns most of its revenue through sales of these tobacco products, with significant income both from traditional combustibles and its smoke-free product portfolio, particularly oral nicotine pouches, and heated tobacco products.
From wholesalers and distributors to large retail chains and military outlets, Altria serves a varied clientele. The ultimate consumer base is adult smokers above 21 years seeking tobacco products. Altria focuses strategically on the U.S. market to gain control over changing consumer preferences across the tobacco industry.
The company, in its latest Q3 earnings, pulled off an impressive turnaround from the previous quarter, outpacing expectations on both revenue and EPS. While EPS exceeded analyst’s estimates by $0.03, standing at $1.38, revenue surpassed projections by $10 million, recorded at $5.34 billion. The EPS climbed by 7.8% in contrast to the steady 1.1% surge in revenue, showcasing the company’s ability to efficiently turn revenue into incremental profit.
Additionally, the Altria Group stock has displayed strong momentum, boasting a 48.4% total return over the past year and a robust 25.94% return in the last six months. Just recently, the giant’s stock soared to a 52-week high, touching $55.09. Much of the price appreciation is attributed to the oral tobacco company, particularly NJOY and on!, with shipment volumes rising over 15%. Apart from the future growth in oral tobacco products, our bullish thesis is also based on the company’s plans to launch a modernization initiative anticipated to save $600 million over the span of five years.
If we talk about the dividend history – one can’t help but notice the company’s track record of raising its dividend for 14 consecutive years. Moreover, the company’s attempts to aggressively buy back shares can’t be overlooked either. Despite business challenges and a faster-than-expected decline in cigarette market share, Altria is still on track to hit its EPS growth target of 2% to 5% for both 2024 and 2025.
Altria Group doesn’t rank on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held MO at the end of the second quarter which was 38 in the previous quarter. While we acknowledge the potential of MO as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as MO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
