Altria: Q4 Showed Overall Stability But Partial Headwinds

(Preview) Company Update (MO US) (Buy)

Summary

• Altria delivered solid Q4 results, helping to generate a full-year EPS growth of 5.7%; 2022 EPS growth is guided to a similar 4-7%.

• The Smokeable segment was steady, though it now faces macro headwinds including post-COVID normalization and inflation.

• U.S. E-vapor volume was flat in Q4, positive for Altria. Oral Tobacco profits are falling slowly. No IQOS sales are likely in 2022.

• Overall, we expect the core cigarette business to remain stable and serves as the main driver for an annual Net Income growth of 4%.

• With shares at $50.40, we expect a total return of 67% (15.9% annualized) by 2025 year-end. The Dividend Yield is 7.1%. Buy.

Introduction

Altria Group, Inc. released Q4 2021 results this morning (Thursday, January 27). Shares are currently up 1.9% (as of 3:40 pm EST).

We upgraded our rating on Altria to Buy in February 2020. Since then, shares have gained 20.6% (after dividends), including 33.6% since 2021.

Q4 results showed that Altria's core cigarette business has remained sta…