Altria Group Inc. (NYSE: MO): Q1 Earnings Preview 2011

Altria Group Inc. (NYSE: MO) is scheduled to release its first-quarter financial results before the opening bell on Wednesday, April 20, 2011. Analysts, on average, expect the company to report earnings of 44 cents per share on revenue of $3.93 billion. In the year ago quarter, the reported earnings of 42 cents per share on revenue of $3.95 billion. 

Altria Group, Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes, wine, and other tobacco products in the United States and internationally. The company dominates the U.S. tobacco business, with 50% of the market. It is No. 1 in the U.S. in sales of cigarettes and smokeless tobacco and is No. 2 in cigars.

The demand for company's cigarettes has been impacted by decreasing social acceptability of smoking, increased regulation, public awareness of smoking's health risks, and rising costs due to excise taxes and litigation expenses. However, the company has managed to grow its profits despite negative press and increased regulatory actions.

In the preceding fourth-quarter, the Richmond, Virginia-based company's net income was  $919 million or $0.44 per share, compared to $725 million or $0.35 per share in the year-ago period. On an adjusted basis, the company earned 44 cents a share in the fourth quarter. Revenue rose 1.4% to $5.93 billion.  Analysts, on average, expected the company to report earnings of 44 cents per share on revenue of $4.27 billion. Altria achieved cost savings of $65 million in the fourth quarter of 2010 and $317 million for the full year. The company expects to achieve about $145 million in additional cost savings by the end of 2011 for total anticipated cost reductions of $1.5 billion versus 2006.

At its last earnings call in January, the company Altria said that it expects fiscal 2011 earnings in a range of $2.00-$2.06 per share. The forecast includes estimated net charges of $0.01 per share related to SABMiller plc special items, partially offset by estimated gains on sales of land and buildings. The company expects adjusted earnings per share for the year, excluding special items, in a range of $2.01-$2.07. This represents a growth rate of 6 to 9 percent from an adjusted base of $1.90 per share in the prior year. Altria said that it expects the first half of fiscal year 2011 to be more challenging for income growth comparison purposes than the second half of 2011, due to cigarette trade inventory movements and the timing of new tobacco product launches in 2010.

Many companies in the industry are diversifying to insure the waning smoking population does not affect their profits. Some like Altria  are investing more into their smokeless products and advertising for said alternatives. Altria owns the two leading smokeless brands, Skoal and Copenhagen, which are helping the company migrate smokers to other tobacco products as they attempt to quit. 

Cigarette manufacturers' pricing power remains intact despite increased government regulation and growing excise taxes. Manufacturers can still raise prices at a faster rate than volumes decline, creating revenue and earnings growth. This ability to pass escalating costs onto the consumer has been a boon to the industry where, generally, as the market shrinks the prices rise and margins remain stable

Altria’s diversified geographical footprint, robust cash flow, under-leveraged balance sheet, and high dividend yield supports its long-term profitability outlook.

The company's stock currently trades at a forward P/E (fye Dec 31, 2012) of 11.99 and PEG ratio (5 yr expected) of 2.33. In terms of stock performance, Altria shares have gained nearly 30 percent over the past year.

Full Disclosure: None.

Altria Group Inc. (NYSE: MO): Q4 Earnings Preview 2010

Altria Group Inc. (NYSE: MO) is scheduled to release its fourth-quarter financial results before the opening bell on Thursday, January 27, 2011. Analysts, on average, expect the company to report earnings of 44 cents per share on revenue of $4.27 billion. In the year ago quarter, the reported company reported earnings of 39 cents per share on revenue of $4.10 billion. The company dominates the U.S. tobacco business, with 50% of the market. It is No. 1 in the U.S. in sales of cigarettes and smokeless tobacco and is No. 2 in cigars.

Altria Group, Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes, wine, and other tobacco products in the United States and internationally.

The demand for company's cigarettes has been impacted by decreasing social acceptability of smoking, increased regulation, public awareness of smoking's health risks, and rising costs due to excise taxes and litigation expenses. However, the company has managed to grow its profits despite negative press and increased regulatory actions.

In the preceding third-quarter, the Richmond, Virginia-based company's net income was $1.13 billion, or 54 cents a share, compared to $882 million, or 42 cents a share, in the year-earlier quarter. On an adjusted basis, the company earned 54 cents a share in the latest quarter. Revenue rose 1.6% to $6.4 billion.  Analysts, on average, expected the company to report earnings of 52 cents per share on revenue of $4.42 billion. The company’s flagship Marlboro brand scored a retail market share of 42.6%, up from 41.9%.

At its last earnings call in October, the company boosted its 2010 full-year guidance for reported earnings from a range of $1.81 to $1.85 to a range of $1.83 to $1.87, reflecting tax benefits from the reversal of tax reserves and associated interest. The company also reaffirmed its 2010 full-year outlook for adjusted earnings in the range of $1.87 to $1.91, representing a growth rate of 7% to 9% from an adjusted base of $1.75 per share in 2009.

Many companies in the industry are diversifying to insure the waning smoking population does not affect their profits. Some like Altria  are investing more into their smokeless products and advertising for said alternatives. Altria owns the two leading smokeless brands, Skoal and Copenhagen, which are helping the company migrate smokers to other tobacco products as they attempt to quit. At Altria, smokeless product volume was up 16.4 %in the third quarter.

Cigarette manufacturers' pricing power remains intact despite increased government regulation and growing excise taxes. Manufacturers can still raise prices at a faster rate than volumes decline, creating revenue and earnings growth. This ability to pass escalating costs onto the consumer has been a boon to the industry where, generally, as the market shrinks the prices rise and margins remain stable

Altria’s diversified geographical footprint, robust cash flow, under-leveraged balance sheet, and high dividend yield supports its long-term profitability outlook.

Altria pays a 6.1% dividend and sells for less than 14 times trailing earnings. In terms of stock performance, Altria shares have gained nearly 21 percent over the past year.

Full Disclosure: None.

Altria Group Inc. (NYSE: MO): Q4 Earnings Preview 2009

Altria Group Inc. (NYSE: MO) is scheduled to release its fourth-quarter financial results before the opening bell on Thursday, January 28, 2009. Analysts, on average, currently expect the company to report earnings of 40 cents a share on revenue of $4.14 billion. In the year ago quarter, the company reported earnings of 37 cents per share on revenue of $3.83 billion.

Altria Group, Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in the United States and internationally. The company also manufactures machine-made large cigars and pipe tobacco; and maintains a portfolio of leveraged and direct finance leases principally in transportation, including aircraft, as well as power generation and manufacturing equipment and facilities. Altria is also the largest shareholder in UK-listed brewer, SABMiller plc with a 27.37% stake.

The demand for company's cigarettes has been impacted by decreasing social acceptability of smoking, increased regulation, public awareness of smoking's health risks, and rising costs due to excise taxes and litigation expenses.However, the company has been able to grow its profits despite negative press. In October, The Richmond, Virginia-based company said that third-quarter net income rose 1.7% to $882 million from $867 million in the year-ago quarter. However, per share earnings were $0.42, flat with last year. On an adjusted basis, earnings from continuing operations increased to $998 million or $0.48 per share from $951 million or $0.46 per share in the same quarter of last year. Quarterly net revenues totaled $6.30 billion, up 20.3% from the previous year's $5.24 billion. Analysts, on average, expected the company to report earnings of $0.47 per share on revenue of $4.66 billion.

Altria has benefited from its focus on agressive cost reduction programs. In the third quarter of 2009 $76 million in cost savings were achieved across the Altria family of companies. The company expects to achieve approximately $619 million in additional cost savings by 2011.

Philip Morris USA shipped 37.5 billion cigarettes domestically in the quarter, down 16.4% from the prior-year period, although it pegs the decrease at 12% when it is adjusted for changes in trade inventories largely brought on by a massive hike in federal excise taxes. Smokeless tobacco volumes declined 4.5% and cigar volumes rose almost 4%.

The company's flagship brand Marlboro's retail share for the quarter edged up 0.1 share point to 41.9% from last year's 41.8%.

For fiscal 2009, the company anticipates earnings from continuing operations in the range of $1.53 per share to $1.56 per share. Adjusted earnings from continuing operations is projected to range between $1.74 and $1.77 per share.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 10.67 and PEG ratio (5 yr expected) of 1.41. The company offers an outstanding 6.8% dividend yield. In terms of stock performance, Altria shares have gained 20 percent over the past year.

Full Disclosure: None.