Altria Group, Inc. MO is expected to announce its fourth-quarter 2023 earnings on Feb 1, with a consensus estimate of $1.17 per share, marking a 0.9% decline from the prior year. The Zacks Consensus Estimate for revenues is $5.1 billion, slightly up from the previous year. The company has been experiencing a negative trend in earnings surprises over the trailing four quarters.
Market Challenges and Revenue Impact
The overall cigarette industry has been adversely impacted by inflation, leading to changes in consumer spending patterns. Altria has witnessed a consistent decline in Smokeable Product segment revenues due to reduced cigarette consumption and volumes. In the third quarter of 2023, the company saw a significant drop in domestic cigarette shipment volumes, primarily attributed to industry decline rates, retail share losses, and inventory movements.
Looking ahead, the Zacks Consensus Estimate for fourth-quarter revenues in the Smokeable Products segment suggests a decrease compared to the year-ago period, furthering concerns about the company’s revenue generation capabilities.
Price, Consensus, and EPS Performance
Altria’s management has adjusted its full-year 2023 EPS outlook to $4.91-$4.98, representing a modest growth from 2022. The company’s pricing power has been a key source of strength, counterbalancing the potential reduction in cigarette sales due to higher prices. The focus on smoke-free alternatives and reduced-risk products, as well as investments in product research and development, demonstrate a proactive response to shifting consumer preferences.
Predicting Altria’s Earnings Performance
Despite the overall challenges, the earnings prediction model does not favor an earnings beat for Altria this time, as indicated by its Earnings ESP of -1.75% and a Zacks Rank #4 (Sell). These factors suggest limited potential for the company to exceed earnings expectations. However, it’s important for investors to remain cautiously optimistic considering the resilience and adaptability that Altria has shown in the past.
Competitor Analysis
In evaluating potential investment opportunities within the same sector, investors should consider companies like Inter Parfums, Mondelez International, and The Estee Lauder Companies, which have demonstrated favorable combinations for potential earnings surprises. These companies have exhibited varying strengths and weaknesses that should be carefully assessed in relation to Altria’s performance.
As the earnings announcement date approaches, investors can closely follow the earnings calendar to stay informed about market trends and potential investment opportunities.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
