The Tobacco earnings algorithm has broken down, and both revenue and Operating Income fell in Q4.
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Highlights
Revenues, Operating Income and Net Income all fell in Q4
Cigarette volume fell 10%, clearly cannibalized by e-vapor
Price realization and cost efficiency have both diminished
Altria has ~4% share in e-vapor, lost share in nicotine pouches
At $41.36, we see 11.6% IRR, driven by 9.5% Dividend Yield
Introduction
Altria reported Q4 2023 results on Thursday (February 1). Shares finished the day up 4%, before falling back 1% on Friday. Altria’s share price has now fallen 11.8% in the past year, generating a loss of 3.7% after dividends:
Altria Share Price (Last 1 Year)
Source: Google Finance (03-Feb-24).
Q4 2023 results showed the traditional Tobacco earnings algorithm has broken down for Altria. Cigarette volumes fell 9% year-on-year on an adjusted basis and, even with the benefit …