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David Jagielski, CPA, The Motley Fool
Sat, May 23, 2026 astatine 11:20 AM CDT 4 min read
Tobacco elephantine Altria (NYSE: MO) has been struggling to make overmuch maturation successful caller years. As less radical smoke, the institution has been pivoting to other, little harmful products for consumers. It's been a challenging travel for the company, and there's nary denying that smokeable baccy is inactive its halfway business, and it's going to stay that mode for the foreseeable future.
When the institution precocious reported earnings, determination was a affirmative astonishment for investors, oregon truthful it seemed anyway. Sales were up 5% from the aforesaid play compared to a twelvemonth ago. That's not the benignant of maturation investors person been accustomed to seeing from the company. But erstwhile looking astatine the bigger picture, the results look acold little exciting.
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Altria's numbers were up, but they were besides going up against immoderate weaker comparables
When a concern is successful decline, it whitethorn beryllium easier to amusement maturation adjacent if the numbers aren't needfully higher than they were a fewer years ago. And that's precisely the lawsuit with Altria. On a year-over-year basis, income (net of excise taxes) were up implicit 5% successful its astir caller 4th -- the champion complaint the baccy institution has achieved successful aggregate years.
Its gross during the archetypal 3 months of the year, erstwhile excluding excise taxes, totaled $4.1 billion. Five years earlier, however, that fig stood astatine astir $4.9 billion. Its gross has really declined by astir 16% implicit that clip frame.
While determination has been immoderate maturation successful its oral baccy products implicit the past 5 years, it's not thing to get terribly excited about. From $626 cardinal successful nett gross backmost successful the archetypal 4th of 2021 to $669 cardinal this past quarter, that's an summation of conscionable nether 7%. It's modest, and it inactive means that it's a tiny fraction of the wide business.
Why I wouldn't bargain into the stock's rally
It's astonishing that Altria's banal has been rising successful worth this twelvemonth and is adjacent beating the market. However, the bullishness whitethorn beryllium owed to a operation of the stock's debased valuation (it trades astatine astir 13 times its projected aboriginal earnings) and its dividend, which yields 5.7%.
But those aren't large reasons for investing successful the company. If its numbers deteriorate amid its decline, the valuation whitethorn abruptly look worse, and determination whitethorn inevitably beryllium unit connected the payout arsenic well. If the concern isn't increasing and it needs to put successful caller opportunities, a simplification successful the dividend whitethorn beryllium a anticipation down the road.
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