Altria: Structural Challenges Piled Up in Q4 2024 Results
Company Update (MO US) (Neutral): “Value” investors should look deeper than the stock’s 10x P/E and 7.8% Dividend Yield.
Highlights
Cigarette volume decline again exceeded 10% on an underlying basis.
Illicit disposables still out of control, but Altria’s NJOY soon faces a ban.
on! is growing but has started losing share in nicotine pouches again.
Revenues and op. income were flat in 2024; EPS only grew from buybacks.
At $52.23, P/E is ~10x and Dividend Yield is 7.8%, but stock is speculative.
Introduction
We review our Neutral rating on Altria after the company released Q4 2024 results on Thursday (January 30). Since results, Altria shares have fallen by 0.8%, and are currently just ~10% higher than 5 years ago:
Altria Share Price (Last 5 Years)
Source: Google Finance (01-Feb-25).
We downgraded our rating on Altria to Neutral last April, while keeping Philip Morris (Buy-rated since June 2019) as a top-5 position in our “Select 15” model portfolio. Since then, Altria shares have gained 26.9% while Philip Morris shares has gained 39.7% (both figures include dividends), which means our focus on business quality has paid off so far.
Q4 2024 results, once temporary factors are excluded, show Altria continues to face structural headwinds across its businesses. We do not believe its superficial cheapness – 10x P/E and 7.8% Dividend Yield – make it a good investment.
(The rest of this article is for paid subscribers only, but unlocking it costs just $10; you can see a free sample of our research here.)