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Altria (MO) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 mins read

In the latest trading session, Altria (MO) closed at $38.36, marking a -1.51% move from the previous day. This move lagged the S&P 500's daily loss of 0.48%. Meanwhile, the Dow lost 0.48%, and the Nasdaq, a tech-heavy index, lost 0.29%.

Heading into today, shares of the owner of Philip Morris USA, the nation's largest cigarette maker had lost 10.95% over the past month, lagging the Consumer Staples sector's loss of 2.27% and the S&P 500's loss of 4.3% in that time.

Investors will be hoping for strength from MO as it approaches its next earnings release, which is expected to be October 30, 2020. In that report, analysts expect MO to post earnings of $1.14 per share. This would mark year-over-year growth of 5.56%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.45 billion, up 0.62% from the year-ago period.

MO's full-year Zacks Consensus Estimates are calling for earnings of $4.31 per share and revenue of $20.37 billion. These results would represent year-over-year changes of +2.13% and +2.92%, respectively.

Any recent changes to analyst estimates for MO should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. MO currently has a Zacks Rank of #3 (Hold).

In terms of valuation, MO is currently trading at a Forward P/E ratio of 9.04. Its industry sports an average Forward P/E of 10.22, so we one might conclude that MO is trading at a discount comparatively.

Investors should also note that MO has a PEG ratio of 2.26 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Tobacco stocks are, on average, holding a PEG ratio of 2.12 based on yesterday's closing prices.

The Tobacco industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 76, putting it in the top 30% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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Zacks Investment Research