We've been asking ourselves recently if the market has placed a fair valuation on Altria. Let's dive into some of the fundamental values of this Large-Cap Consumer Defensive company to determine if there might be an opportunity here for value-minded investors.
Altria Has Defensive Qualities:
Altria Group, Inc., through its subsidiaries, manufactures and sells smokeable and oral tobacco products in the United States. The company belongs to the Consumer Defensive sector, which has an average price to earnings (P/E) ratio of 25.91. In contrast, Altria has a trailing 12 month P/E ratio of 11.9 based on its earnings per share of $5.17.
Altria has moved 23.0% over the last year compared to 16.8% for the S&P 500 -- a difference of 6.1%. Altria has a 52 week high of $62.21 and a 52 week low of $48.86.
The Company's Revenues Are Declining:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $25,110 | $26,153 | $26,013 | $25,096 | $24,483 | $24,018 |
| Gross Margins | 51% | 50% | 54% | 56% | 57% | 60% |
| Net Margins | -5% | 17% | 10% | 23% | 33% | 47% |
| Net Income (M) | -$1,293 | $4,467 | $2,475 | $5,764 | $8,130 | $11,264 |
| Net Interest Expense (M) | -$1,280 | -$1,209 | -$1,162 | -$1,058 | -$989 | -$1,037 |
| Depreciation & Amort. (M) | $226 | $257 | $244 | $226 | $272 | $109 |
| Diluted Shares (M) | 1,869 | 1,859 | 1,845 | 1,804 | 1,777 | 1,718 |
| Earnings Per Share | -$0.7 | $2.4 | $1.34 | $3.19 | $4.57 | $6.54 |
| EPS Growth | n/a | 442.86% | -44.17% | 138.06% | 43.26% | 43.11% |
| Avg. Price | $35.61 | $32.36 | $39.92 | $45.69 | $41.11 | $61.5 |
| P/E Ratio | -50.87 | 13.48 | 29.79 | 14.32 | 9.0 | 9.4 |
| Free Cash Flow (M) | $7,591 | $8,154 | $8,236 | $8,051 | $9,091 | $8,611 |
| CAPEX (M) | $246 | $231 | $169 | $205 | $196 | $142 |
| EV / EBITDA | 8.88 | 7.74 | 8.37 | 8.83 | 8.21 | 11.61 |
| Total Debt (M) | $29,042 | $30,971 | $29,149 | $28,236 | $27,354 | $26,453 |
| Net Debt / EBITDA | 2.55 | 2.34 | 2.08 | 1.99 | 2.0 | 2.06 |
| Current Ratio | 0.59 | 0.79 | 0.71 | 0.84 | 0.49 | 0.51 |
Altria has exceptional EPS growth, generally positive cash flows, and healthy leverage levels. However, the firm suffers from declining revenues and decreasing reinvestment in the business and not enough current assets to cover current liabilities because its current ratio is 0.51. Finally, we note that Altria has similar gross margins to its peers.
