Altria: Stable Q1 Even As Macro Worsened; 6.6% Dividend Yield

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

Summary

• Altria reported solid Q1 2022 results, with continuing earnings stability despite inflation, higher oil prices, and other macro pressures.

• Adjusted EPS grew 4.7% year-on-year, driven by growth in the core Smokeables segment and helped by share repurchases.

• Cigarette volume fell 8% on an adjusted basis, in line with Q4 2021 and against a strong prior-year quarter when it fell only 3.5%.

• The Oral Tobacco business is declining, but more than offset by Smokeables growth. The proposed FDA menthol ban is not a threat.

• With shares at $54.92, we expect a total return of 53% (14.1% annualized) by 2025 year-end. The Dividend Yield is 6.6%. Buy.

Introduction

Altria Group, Inc. released Q1 2022 results this morning (Thursday, April 28). Shares are currently up 0.5% (as of 8:30 pm EST).

We upgraded our rating on Altria to Buy in February 2020. Since then, shares have gained 30% (after dividends), including 45% since 2021.

Altria reported solid growth in Q1 2022 and reaffirmed its full-year outlook.…