Altria Group Inc beats expectations with Q4 results

Altria Group Inc (NYSE:MO) has released Q4 results


Altria Group Inc (NYSE:MO) has released Q4 results for the 2017 financial year today. They show a 50.7% decrease in reported EPS versus the comparable period from 2016. However, the reported EPS figure of $2.60 included special items. Once they were removed, adjusted EPS moved 33.8% higher to $0.91. This was ahead of the market consensus forecast of $0.80.

On a full year basis, there was a decrease in reported EPS – again due to special items. While it was 27.1% lower on a reported basis, full year adjusted EPS was 11.9% higher as it excluded special items. It stood at $3.39.

During the year, Altria paid out $4.8 billion in dividends, with payments to shareholders increasing by 8.2%. It also repurchased more than $2.9 billion in shares.

Its success continues to be focused on the tobacco business. It generated strong income growth and was able to expand already high margins. The acquisition of Nat Sherman strengthens the company’s position within the smokeable segment – specifically within the growing super-premium cigarette segment.

Progress was also made with the company’s goal of becoming the US leader in authorized, non-combustible reduced-risk products. More progress is expected on this in 2018, while adjusted EPS growth for the current financial year is expected to be between 15% and 19%.

Also included in today’s results is news that Altria’s Chairman and CEO, Marty Barrington, has announced his decision to retire in May 2018. He will be replaced by Howard Willard.

In my view, the company continues to make good progress with its strategy. Although there are concerns regarding changes to regulations which may be implemented by the FDA, I feel the tobacco and reduced risk product segments continue to offer high growth potential. They could deliver further margin growth and traction among consumers respectively. Therefore, I feel more share price growth could be ahead for Altria in 2018 and beyond.

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Robert Stephens is a CFA Charterholder and works as an Equity Analyst. He is a keen private investor and has bought and sold stocks for 15 years, investing in a range of sectors and markets. He has previously written for Seeking Alpha and The Motley Fool, and now runs his own business. If you would like to contact Robert, please email or contact him via one of the other methods on the 'Contact Us' page