Altria Group Faces Revenue Decline Despite Stock Price Increase and Dividend Pressure
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
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Source: Fool
- Revenue Decline Trend: Altria Group's revenue continues to decline despite attempts to mitigate the impact of falling smoking rates through price increases, indicating that this strategy may be losing effectiveness, which could affect future profitability and shareholder returns.
- Dividend Pressure: With a current annual payout of $4.24 per share and a dividend yield of 6.8%, Altria's free cash flow of approximately $9.2 billion over the past 12 months only covers $6.9 billion in dividend costs, raising concerns about the sustainability of future dividend increases.
- Investment Missteps Impact: The company's $12.8 billion investment in a 35% stake in Juul in 2018, followed by a stake exchange due to legal and regulatory issues, along with a $1.7 billion investment in Cronos Group for a 45% stake in 2019, has led to significant financial losses, affecting its overall financial health.
- Contradictory Market Response: Despite Altria's stock price rising since early 2024, with a current P/E ratio of 12, investor confidence in its future growth appears to be waning, potentially leading to short-term price instability, necessitating close monitoring of market acceptance of its new business lines.
Analyst Views on MO
Wall Street analysts forecast MO stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for MO is 65.60 USD with a low forecast of 57.00 USD and a high forecast of 72.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
6 Analyst Rating
4 Buy
1 Hold
1 Sell
Moderate Buy
Current: 61.030
Low
57.00
Averages
65.60
High
72.00
Current: 61.030
Low
57.00
Averages
65.60
High
72.00
About MO
Altria Group, Inc. operates a portfolio of tobacco products for United States tobacco consumers aged 21+. Its segments include smokeable products and oral tobacco products. The smokeable products segment consists of combustible cigarettes and machine-made large cigars. The oral tobacco products segment includes moist smokeless tobacco (MST) products and oral nicotine pouches. Its wholly owned subsidiaries include manufacturers of both combustible and smoke-free products. In combustibles, it owns Philip Morris USA Inc. (PM USA), and John Middleton Co. (Middleton), which are cigarette manufacturers. Its smoke-free portfolio includes ownership of U.S. Smokeless Tobacco Company LLC (USSTC), a global MST manufacturer, Helix Innovations LLC (Helix), a manufacturer of oral nicotine pouches, and NJOY, LLC (NJOY), an e-vapor manufacturer with a commercialized product portfolio. The brand portfolios of its operating companies include Marlboro, Black & Mild, Copenhagen, Skoal, on! and NJOY.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
