Altria (NYSE: MO) is scheduled to report its Q4 2022 results on Thursday, January 26. We expect MO stock to see little movement, with its revenue and earnings aligning with the street expectations. Although the company should continue to see a decline in cigarette volume, given the declining market and higher inflation, pricing growth will likely help offset the revenue loss from volume. While we expect little movement in MO stock based on its Q4 results, it has more room for growth from a valuation perspective, as discussed below. Our interactive dashboard analysis of Altria Earnings Preview has additional details.

(1) Revenues expected to align with the consensus estimates

• Trefis estimates Altria’s Q4 2022 revenues to be around $5.2 billion, reflecting a low single-digit y-o-y rise and in line with the $5.2 billion consensus estimate.
• Altria sells its tobacco products in the U.S. Revenue is generated from selling cigarettes, oral tobacco, and smokeless products.
• While the company is expected to see continued pricing growth, lower volume/mix will likely weigh on its top-line growth.
• Looking at Q3 2022, the company reported net revenue of $5.4 billion, marking a 2% decline over the prior-year quarter.
• The decline in revenue can be attributed to lower cigarette volume (down 9%) and the sale of its wine business in October 2021.
• Our dashboard on Altria Revenues has details on the company’s segments.

(2) EPS likely to be in line with the consensus estimates

• Altria’s Q4 2022 adjusted earnings per share (EPS) is expected to be $1.17 per Trefis analysis, aligning with the consensus estimate. This compares with the $1.07 figure the company reported in the prior-year quarter.
• The company’s net income of $2.3 billion in Q3 2022 reflected a modest rise from the $2.3 billion figure seen in the prior-year quarter due to a 90 bps y-o-y rise in operating margin to 58.9%.
• For the full-year 2023, we expect the adjusted EPS to be higher at $5.11 compared to the EPS of $4.61 in 2021 and an estimated $4.83 in 2022.

(3) MO stock looks like it has some more room for growth

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• We estimate Altria’s Valuation to be around $52 per share, which is 16% above the current market price of $45.
• At its current levels, MO stock is trading at a little under 9x forward EPS estimate of $5.11 in 2023, compared to the last three-year average of about 10x, implying that it has some room for growth.
• If the company reports upbeat Q4 results and provides a 2023 outlook better than the street estimates, the P/E multiple will likely be revised upward, resulting in higher levels for MO stock.

While MO stock looks like it has some room for growth, it is helpful to see how Altria’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Ecolab vs. Philip Morris.

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