Altria shares fell by -2.0% during the day's afternoon session, and are now trading at a price of $65.35. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Altria Shares Are Inexpensive:
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 12.6 based on its earnings per share of $5.17.
Altria has moved 32.7% over the last year compared to 15.9% for the S&P 500 -- a difference of 16.8%. Altria has a 52 week high of $68.6 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 | $40.34 | $66.65 |
| P/E Ratio | -50.87 | 13.48 | 29.79 | 14.32 | 8.83 | 10.19 |
| 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 | 8.1 | 12.41 |
| 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.
