Altria Group Inc.
) is set to report second-quarter 2014 results on Jul 22. Last
quarter, the company posted in-line results. Let us see how things
are shaping up for this announcement.
Factors to Consider this Quarter
Altria has been seeing soft volume trends for several quarters
now 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
anti-smoking campaigns pose significant headwinds for margins.
These headwinds are expected to continue in the second quarter as
Also, during the first quarter, the company began implementing
its strategy to manage Skoal's pricing actions in select
geographies. The strategy might negatively impact second quarter
shipment volumes, but is expected to strengthen the Skoal brand
over the long-term.
The company has nationally rolled out its flagship e-cigarette
brand MarkTen in June. Earlier in April, Altria's subsidiary Nu
Mark acquired the e-vapor business of Green Smoke, which has
broadened Nu Mark's product offerings and strengthened its supply
chain capabilities. These developments are expected to bear fruits
in the e-cigarette category in the upcoming quarter.
However, last week, tobacco giants
Reynolds American Inc.
(LO) entered into an agreement where Reynolds will take over
Lorillard for $68.88 per share or a total consideration of $27.4
billion, including assumption of net debt. The combined entity
might pose a threat to peer Altria Group, which commands more than
40% market share in tobacco industry in U.S. (Read:
Reynolds' $27.4B Lorillard Buy Fails to Cheer
Our proven model does not conclusively show that Altria is
likely to beat earnings this quarter. That is because a stock needs
to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is
not the case here as you will see below.
ESP for Altria is 0.00% as both the Most Accurate Estimate and
Zacks Consensus Estimate stand at 65 cents per share.
Zacks Rank #4 (Sell):
We caution against stocks with Zacks Ranks #4 and #5 (Sell
rated stocks) going into the earnings announcement, especially when
the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks in the consumer staples sector that have both a
positive earnings ESP and a favorable Zacks Rank are:
Dr Pepper Snapple Group, Inc.
), with Earnings ESP of +3.30% and a Zacks Rank #3 (Hold).
The Coca-Cola Company
), with Earnings ESP of +4.76% and a Zacks Rank #3
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
ALTRIA GROUP (MO): Free Stock Analysis Report
REYNOLDS AMER (RAI): Free Stock Analysis Report
COCA COLA CO (KO): Free Stock Analysis Report
DR PEPPER SNAPL (DPS): Free Stock Analysis
To read this article on Zacks.com click here.