We expect tobacco giant
Altria Group Inc
) to beat expectations when it reports fourth quarter and full
year fiscal 2012 results on Jan 31 before the market opens.
Why a Likely Positive Surprise?
Our proven model shows that Altria is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
), stands at +1.85%.This is very meaningful and a leading
indicator of a likely positive earnings surprise for shares.
Zacks #2 Rank (Buy):
Note that stocks with Zacks Ranks of #1, #2 and #3 have a
significantly higher chance of beating earnings. The Sell-rated
stocks (#4 and #5) should never be considered going into an
earnings announcement. Altria currently retains a Zacks
Rank #2 (Buy).
The combination of the stock's Zacks Rank #2 (Buy) and +1.85%
ESP makes us highly confident of a positive earnings beat on Jan
What is Driving the Better-than-Expected
Altria's underlying business is gaining momentum with its
leading market share in tobacco industry, efficient cost
management, new product launches, and a flourishing smokeless
It delivered solid earnings results in both second and third
which were well ahead of prior year quarter earnings. Altria
posted positive surprises for fourth quarter of 2011 and second
quarter of 2012 and matched expectations in the first quarter and
third quarter of 2012, which brings the average earnings
surprise to 2.78%.
Altria's flagship brand Marlboro continues to occupy a leading
position in the tobacco industry. Moreover, the company enriches
its brand value through aggressive promotions and new product
launches which is expected to boost earnings in the near
The efficient cost management of the company coupled with a
major share in the industry enables the company to dictate price
in the smokeable segment of the tobacco industry. The smokeless
segment is also expected to back robust earnings with leading
brands like Copenhagen and Skoal.
Overall, Altria has a bright prospect for fiscal 2013,
expecting continued robust consolidated operating margin and
earnings improvement in the year ahead.
Other Stocks to Consider
Altria is not the only bullish firm in the consumer staples
segment this earnings season. We also see likely earnings beats
coming from the following industry peers:
J.M. Smucker Co.
): Earnings ESP of +0.73% and Zacks Rank #2 (Buy).
Green Mountain Coffee Roasters Inc.
): Earnings ESP of +3.08% and Zacks Rank #2 (Buy).
Reynolds American, Inc.
): Earnings ESP of +1.35% and Zacks Rank #3 (Hold).
GREEN MTN COFFE (GMCR): Free Stock Analysis
ALTRIA GROUP (MO): Free Stock Analysis Report
REYNOLDS AMER (RAI): Free Stock Analysis
SMUCKER JM (SJM): Free Stock Analysis Report
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