Earnings Preview: Altria Group (MO) – Price and Volume Are Critical Factors
By:NewsyStocks   Thursday, January 26, 2022 1:12 PM

Tobacco major, Altria Group is scheduled to release its fourth quarter earnings on Friday, January 27. Cigarette pricing and volume will be critical factors determining results this quarter. Falling revenues seem to be the trend for Altria in the last few quarters and investors will be keen for a turnaround.

Altria Group is expected to post EPS of $0.49 this quarter with analyst estimates ranging from $0.47 and $0.51. Revenue for the quarter is expected to be $4.23 billion, an increase of 2.2 percent year-over-year.

Cigarette volumes this quarter are expected to dip 4.5 percent with major brand, Marlboro expected to decline 4.4 percent.

Pricing however should help offset any weakness in volume with expected reported and adjusted net pricing increases of 3.3 percent and 6.3 percent respectively.

Altria's other product segments namely smokeless, cigars and wine are expected to show volume/pricing improvements.

Analysts are mostly neutral on MO with 9 Hold recommendations from 15 ratings.

Third Quarter Results & Earnings History

Revenue fell in all three reported quarters of FY2011 dropping 0.2 percent in Q1, 7.8 percent in Q2 and 3 percent in the third quarter.

Income over the last few quarter has been sliding at a rate of 2.9 percent year-over-year during the last 4 quarters. However with a diverse product mix, Altria should be able to post an increase this quarter.

Our Take

Altria's falling cigarette volumes this quarter should stabilize going into FY2012. The recent price hikes in the United States and strong government initiatives to lower tobacco consumption are direct contributors to lower shipment but strong pricing power is contributing the top line growth. Also Altria's diverse product range including its stake in SABMiller Plc should provide for a good quarter.