Mo Stock – Altria (NYSE:MO) is a long-established tobacco company with a long history of growth and resilience. The company recently reported earnings per share for Q4 of $1.18, 2022, beating estimates by $0.02. The company now forecasts 3-6% growth in earnings per share and has approved a $1 billion share repurchase plan.
Valuation of stocks and dividends; Return on share purchases and increased net income make it a solid investment opportunity with ~12% annual ROI. Altria’s share price appears to be moving strongly towards its moving averages, making it an attractive value based on fundamentals and the stock chart.
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Earnings per share were $1.18, surpassing the company’s consensus estimate of $0.02. But revenue of $5.08 billion missed estimates of $66.37 million; It fell 0.06% year over year. The main reason for the loss of revenue was lower net sales of the cigarette products category. Still, adjusted earnings per share were up 8.3% to $1.18.
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2023 business projects fix diluted EPS in the $4.98 to $5.13 range, compared to $4.84 diluted EPS with 2022 baseline adjustments. A 3-6% growth rate is stated. The main driver of this increase was the decrease in outstanding shares; Adjusted operating cash flow and eligible interest expense.
The company has approved an additional $1 billion share buyback program that it expects to complete by the end of 2023.
Altria runs its own business while its net income continues to rise. Average growth was in low single digits, largely driven by price increases. The company does not reinvest most of its earnings into its operations. Your ability to increase your profitability without significant reinvestment is outstanding and demonstrates the strength of your products. Altria is likely to maintain its low single-digit net income growth trend as a result of spending cuts and inflation-driven price increases.
Because the company prefers share repurchase over dividend and reinvestment. Internal growth and capital gains are closely related to stock valuations.
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The company is fueling internal growth with share buybacks that increase EPS. These acquisitions are currently enjoying positive valuations and are expected to generate 2.45% annualized returns on current earnings multiples. The remaining domestic growth will come from net income growth as previously discussed. It is expected to remain in the low single digits.
Dividend yield; The projected rate of return on investment of 12% per annum is reasonable, taking into account share purchases and net income growth. This estimate is based on the assumption that the entity retains most of its current profits and reinvests dividends at a similar rate.
According to its most recent quarterly financial performance, Altria is still going strong. Since 2005, the stock has dropped an average of 8.65% per year, which is strong evidence of the company’s resilience. Analysts agree with my forecast of mid-single-digit EPS growth in the coming years.
Altria’s current trading multiplier of 9.71 is well below its historical average of 14.46. I think the stock is worth much more, but I don’t think the fair value is a multiple of the historical average. The company currently has significant net debt of $22 billion.
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Using multiples of 15 standard earnings, which is close to the historical average, the company’s market capitalization would be approximately $130 billion. adding net debt to market value; The price of 15 new shares will be approximately $62. debt growth in net income; Despite lower dividend and stock payments and net income growth. An annual return of about 12% is possible in the future.
Contrary to my previous post about Altria, I no longer believe that the gain floor of 15 is appropriate. The main reason for this is to maintain competitiveness. Lower figures are needed to sustain significant net debt. However, the Stock is very attractive and the price of ~$62 per share is reasonable.
Quick explanation: Technical analysis alone is not a sufficient reason to buy a stock, but when combined with the fundamentals of the company, it is. This can greatly narrow the price range you are aiming for when purchasing.
As I mentioned in a previous article, Altria’s stock price looks strong near its 200-month moving average. The move comes after the announcement of an augmented share buyback program and strong performance in the company’s latest earnings report has boosted the stock since the announcement.
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I believe it is Attractive value as the stock is trading close to its 50 and 200-day moving averages. The arguments discussed strengthen this view.
Altria is a solid company with a strong growth history. The primary source of expected capital gains from an investment in Altria comes from dividend payments tied to the stock’s value. Share buybacks increase earnings per share, stimulating internal growth. The company expects to continue single-digit net income growth, which will deliver an annual return on investment of approximately 12%, including dividends and share repurchases.
Altria is currently trading at much lower volume than its historical average, which I believe is primarily due to significant net debt levels. So, the Stock remains attractive and the fundamentals of the company together with strong support near the 200-month moving average make it a solid investment opportunity.
Based on the fundamentals of the company and its attractive valuation, I set my price target at ~$62 per share and give it a “Buy” rating.
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Share your thoughts. I love analyzing companies and sharing my thoughts. Be sure to leave positive feedback, if any. Trust your analysis and remember that value is often found against the grain.
Analyst Statement: I own stock; Own a beneficial position in MO stock through options or other derivatives. I wrote this post myself and expressed my opinion. There will be no redemption (except to find Alpha). I do not have any commercial relationship with the company whose stock is mentioned in this article.
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If you have ad-blocking enabled, you may be prevented from continuing. Please disable your ad blocker and update it. Finally, I’m closing a stock I never expected – maybe not at all. Still, there are good reasons for investors to own or at least consider buying cigarette giant Altria Group (NYSE:MO). Aside from the 2020 pandemic sales, which raised dividend yields, Altria is the highest-yielding stock on my radar. That’s why I’m protecting the company. The market offers opportunities for high-yielding investments. Or more importantly, we have high inflation; The combination of increased recession risks and above-average valuations make high-yield investments extremely important. I call this “income equality”. I believe Altria works thanks to its competitor business model.
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Why is an investor who normally focuses on the “growth” part of dividend growth beyond yield now interested in high yield cigarettes?
Although the timing is obscene. I didn’t write this article to offend readers when I wrote that 0.2% return Thermo Fisher Scientific (TMO) is one of the best dividend stocks money can buy.
On a side note, if you want to know why it makes sense to buy very low growth stocks, I highly recommend taking a look.
Not much. Finally, I’m addressing Altria because the current market environment provides a rationale to invest in a high-yielding stock. Yes, as long as the output is of good quality.
One Big Reason To Buy Altria Stock In Light Of Economic Woes
The first reason is that income is a good way to profit from the stock market when capital is low. A long sideways trend would be bad news for stocks with low average returns. But I’m pretty familiar with it
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