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Uncovering Altria Group’s Hidden Gem Status Uncovering Altria Group’s Hidden Gem Status

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  Uncovering Altria Group’s Hidden Gem Status

As we shimmy just past the first lap of 2024, the stock market roller coaster is already in full swing. The “Magnificent 7” giants are swirling in their own financial ballet, while bitcoin is twirling towards multi-year highs. In this chaotic dance, oil futures and gold prices are keeping pace, creating an intricate symphony of market movements. With Wall Street bracing for the new Fed policy announcement, investors are treading cautiously through a macroeconomic minefield. Faced with increasing “bubble” talk surrounding high-flying AI stocks, the allure of value plays and dividend stocks starts to sparkle once more.

In the spotlight shines Altria Group, Inc. (MO), a seasoned Dividend King proudly showcasing over 50 years of uninterrupted dividend growth. Lurking under the radar with a mere whisper of “artificial intelligence” in its earnings report, Altria beckons investors to consider embracing its shares at their current price levels.

About Altria Group Stock

Altria Group, Inc. (MO) boasts a rich history in the tobacco industry, but has gracefully shifted its focus to cater to evolving consumer tastes. Following a turbulent journey with vaping giant Juul, Altria bid adieu to the partnership in the first quarter of 2023, exchanging its ownership for Juul’s heated tobacco intellectual property.

Alongside its iconic Marlboros, Altria’s portfolio now includes Black & Mild cigars, Skoal chewing tobacco, NJOY e-vapor products, and Zyn nicotine pouches. With investments in Cronos Group (CRON) and a stake in global brewing giant Anheuser Busch InBev (BUD), Altria’s diversification game is strong.

While MO stock has stagnated over the past 52 weeks, the year-to-date performance paints a brighter picture, outpacing the S&P 500 Index with a 10.8% gain.

Altria’s Financial Performance

Currently commanding a market cap of $77.36 billion and an enterprise value of $99.91 billion, Altria stands as a beacon of value in the consumer staples sector. With a forward P/E ratio of 8.67 (discounted compared to both sector median and historical average) and impressive price-to-sales and price-to-cash flow ratios, Altria emerges as a potential undervalued gem.

Altria’s Strategic Moves and Dividend Growth

Following its fourth-quarter earnings triumph, Altria flexed its muscles by exceeding EPS estimates and unveiling plans to shed part of its Anheuser Busch InBev stake, paired with a whopping $2.4 billion share buyback program. These maneuvers, alongside raised full-year EPS guidance, herald a bullish stance on Altria’s immediate future.

Not leaving investors parched, Altria’s dividend yield of 8.94% is a refreshing oasis in the income desert. With 54 consecutive years of increasing dividends and a commitment to mid-single-digit annual growth through 2028, Altria’s dividend story is a tale of stalwart consistency.

Analyst Forecast and Verdict

Analysts predict fiscal year 2024 earnings of $5.06 per share, inching towards a revenue of $20.6 billion. While the consensus remains cautious (“Hold” being the predominant outlook), there lurks potential for an earnings upside against the backdrop of Altria’s guidance.

With an average price target of $46.12, analysts’ opinions juxtapose the optimistic dividend yield and strategic moves at play within Altria.

The Undiscovered Fortune of Altria Stock

Sporting a tempting 9% yield and a resolute history of dividend hikes, Altria’s clever maneuvers to shore up earnings and cash flow positions it as an overlooked jewel in the investing realm. Despite the mixed bag of analyst sentiment, the overarching narrative suggests Altria’s stock is primed to continue rewarding investors, making MO an alluring asset worth exploring for those seeking value and income amidst the market’s current ebbs and flows.

On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.