On Jun 11, 2014 we issued an updated research report on tobacco
Altria Group Inc.
Altria reported mixed results for the first quarter fiscal 2014
on Apr 24. The Marlboro owner's first-quarter earnings were in line
with the Zacks Consensus Estimate but surpassed year-ago results by
5.6% due to strong pricing. However, sales missed the Zacks
Consensus Estimate but inched past year-ago results by 0.9% as poor
revenues in the Smokeable segment offset gains in the smokeless
category. The company has been delivering lower-than-expected
volume for several quarters due to a general shift away from
tobacco products amid accelerating prices of cigarettes and
worldwide anti-tobacco campaigns. Moreover, higher fees associated
with litigations and the anti-smoking campaigns are significant
However, we commend Altria's ability to maintain leading
positions in all the categories. The tobacco giant leads cigarettes
category with Marlboro, machine-made large cigars category with
Black & Mild and smokeless tobacco category with Copenhagen and
Moreover, it is investing continuously in improving the
architecture of its brands. In fiscal 2013, Marlboro launched
Southern Cut in the Gold family and Marlboro Edge in the Marlboro
Black family. During the same period, Altria began implementing
strategies to enhance smokeless brand Skoal's equity and carefully
manage price gaps in select geographies.
Altria is also geared to bolster its presence in the e-cigarette
category. After the successful launch of its flagship e-cigarette
brand MarkTen in Indiana and Arizona in fiscal 2013, Altria plans
its national rollout in fiscal 2014.
Moreover, Altria is optimistic for the fiscal year and expects
2014 earnings to benefit from a decline in interest expense,
effective tax rate and share count (due to aggressive share
buybacks). For fiscal 2014, Altria expects earnings in the range of
$2.52 to $2.59, up 6% to 9% from $2.38 in 2013.
Key Picks from the Sector
Altria carries a Zacks Rank #3 (Hold). Other stocks to consider
in the retail sector include
Dr Pepper Snapple Group, Inc.
The WhiteWave Foods Company
). All these stocks carry a Zacks Rank #2.
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ALTRIA GROUP (MO): Free Stock Analysis Report
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