Shares of cigarette manufacturer Altria Group Inc (MO) hit a new 52-week high, closing at $37.06 on May 13, following solid first-quarter 2013 results and the company’s foray into the E-cigarette category. Their previous 52-week high was $36.61, reached on Apr 29.
Year-to-date, Altria’s share prices have recorded a healthy return of 13.5%. The company’s long-term estimated EPS growth rate is 7.9%. Average volume of shares traded over the last three months came in at approximately 10,505K.
Solid First Quarter Performance
Positive pricing, higher earnings from Altria's equity investment in SABMiller, cost saving initiatives, a lower share count owing to share buyback program and lower interest expense continued to be the strength of Altria.
Altria’s first-quarter earnings were up 10.2% from the prior-year quarter on the back of higher pricing and cost reduction initiatives. Earnings also beat the Zacks Consensus Estimate. Though revenues slipped from the prior-year quarter, gross profits and operating income went up due to strict cost controls.
Overall, we are encouraged by the company’s efforts to adapt to the evolving needs of consumers and develop less harmful non-combustible nicotine containing tobacco products. The introduction of an electronic cigarette in the second half of the year is also encouraging.
The company declared a quarterly dividend of 44 cents per share. The current annualized dividend rate is $1.76 per share. As of May 13, 2013, Altria's annualized dividend yield was 4.8%. Altria's Board also authorized a new $300 million share repurchase program that the company expects to complete by the end of 2013.
For 2013, Altria expects its adjusted earnings between $2.35 and $2.41 per share, representing a growth rate of 6% to 9% from $2.21 per share in 2012.
Other Stocks to Consider
Altria holds a Zacks Rank #3 (Hold). Other stocks in the consumer staples sector that are portraying a strong upward trend in the bourses are Flower Foods Inc (FLO) and Fortune Brands Home & Security, Inc. (FBHS) both of which carry a Zacks Rank #1 (Strong Buy), and Reynolds American Inc (RAI) with a Zacks Rank #2 (Buy).
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