Shares of Altria Group (MO) dropped in trading after the tobacco and cigarette producer reported disappointing Q2 results. The company reported adjusted diluted earnings of $1.31 per share, which fell short of analysts’ expectations of $1.34 per share.
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MO’s Q2 Revenues Breakdown
Altria’s revenues, net of excise taxes, declined by 3% year-over-year to $5.3 billion in the second quarter, missing analysts’ expectations of $5.4 billion. The company’s management stated that “despite a challenging operating environment,” its “traditional tobacco businesses also remained resilient.”
Additionally, cigarette shipments fell 13% in Q2 as demand for expensive brands declined, with consumers opting for cheaper options or vapes. In contrast, NJOY vape shipments rose 80% sequentially to 1.8 million units after the FDA granted marketing authorization for its menthol-flavored e-vapor products.
MO’s Dividend and Stock Buybacks
The company paid dividends of $1.7 billion and $3.4 billion in the second quarter and first half of the year, respectively.
Furthermore, as part of Altria’s accelerated share repurchase program (ASR program) announced in the first quarter of the year, the company bought back 53.9 million shares at an average price of $44.50. As of June 30, 2024, the company had $990 million remaining under its $3.4 billion share repurchase program, which is expected to be completed by the end of this year.
Altria’s FY24 Outlook
The company narrowed its guidance for FY24, with adjusted diluted earnings expected to be between $5.07 and $5.15 per share, indicating a growth range of 2.5% to 4% year-over-year. Moreover, MO anticipates that earnings growth will be primarily in the second half of the year. For reference, analysts had been expecting FY24 earnings of $5.10 per share.
Is MO Stock a Good Buy?
Analysts remain sidelined about MO stock, with a Hold consensus rating based on two Buys, Holds, and Sells each. Year-to-date, MO has increased by more than 25%, and the average MO price target of $43.63 implies a downside potential of 13.7% from current levels. These analyst ratings are likely to change following MO’s results today.
