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Altria (MO) to Report Q3 Earnings: What's in the Offing?

Altria Group, Inc. MO is likely to report an increase in the top and bottom lines when it releases third-quarter 2020 numbers on Oct 30. The Zacks Consensus Estimate for earnings has gone up a cent in the past 30 days to $1.15 per share. This suggests a 6.5% increase from the year-ago period’s reported figure. Notably, Altria delivered an earnings surprise of 2.8% in the last reported quarter. Also, the company has a trailing four-quarter earnings surprise of 2.7%, on average.

The Zacks Consensus Estimate for revenues is pegged at $5,521 million, indicating an increase of about 2% from the prior-year quarter’s reported figure.

Altria Group, Inc. Price, Consensus and EPS Surprise

Altria Group, Inc. price-consensus-eps-surprise-chart | Altria Group, Inc. Quote

Key Factors to Note

Altria has been benefiting from strong pricing, which has been aiding its adjusted operating companies’ income or OCI for a while now. Though higher pricing might lead to a possible decline in cigarette consumption, it is seen that smokers tend to absorb price increases owing to the addictive quality of cigarettes.

Though high unemployment rates amid the pandemic have been a headwind for adult tobacco consumers, lower- and middle-income Americans received respite from the government’s stimulus and unemployment benefits. Additionally, the lack of social engagements has facilitated increased tobacco consumption. These factors led to a better performance of overall tobacco industry volumes in the second quarter. Better year-to-date industry trends and anticipations of continued buoyancy in the category encouraged management to lift its domestic cigarette industry volumes target for 2020, when it reported second-quarter results. Such trends bode well for the quarter under review as well. The company now expects a 2-2.5% decline in the domestic cigarette industry’s adjusted volumes for 2020 compared with a 4-6% decrease expected earlier. Markedly, cigarette shipment volumes, in general, have been adversely impacted by anti-tobacco campaigns and increased consumer awareness regarding the harmful impacts of tobacco consumption.

Nonetheless, the company has been benefiting from strength in the Oral Tobacco Products segment.  There has been a general shift among consumers toward several reduced-risk tobacco products due to the serious health hazards of smoking cigarettes and Altria has been responding to the changing market scenario quite well. Toward this end, the launch of IQOS as well as the commercialization of on! are yielding results. The consensus mark for third-quarter revenues in the Oral Tobacco Products segment stands at $660 million, up from $620 million recorded in the year-ago period. The consensus mark for Smokeable Products segment revenues is pegged at $6,005 million, suggesting a decline from $6,049 million recorded in the same period last year.

Altria’s wine segment has been under pressure amid the pandemic and in its last earnings call, management stated that it expects the segment to remain soft on account of restrictions on dining and gatherings. The Zacks Consensus Estimate for segment revenues is pegged at $151 million compared with $167 million reported in the same period last year.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Altria this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Altria currently has a Zacks Rank #3 and an Earnings ESP of +2.06%.

Other Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Nu Skin NUS has an Earnings ESP of +3.54% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newell Brands NWL has an Earnings ESP of +0.33% and a Zacks Rank #2.

Estee Lauder EL has an Earnings ESP of +4.57% and a Zacks Rank #3.

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