Based in Richmond, Virginia, Altria Group, Inc. (MO) manufactures and sells smokeable and oral tobacco products. With a market cap of $93.97 billion, the company also manufactures smoke-free products, including heat-not-burn, moist smokeless tobacco, oral nicotine pouches, and E-vapor.
Companies worth more than $10 billion are generally described as “large-cap stocks,” Altria Group fits right into that category, with its market cap exceeding this threshold. The company owns Philip Morris USA, the most profitable U.S. cigarette manufacturer, and offers its products under various brand names, including Marlboro, Black & Mild, Copenhagen, Skoal, Red Seal, and Husky.
Despite a slight decline from its 52-week high of $54.92, reached on Aug. 4, shares of this tobacco company have gained 17.5% over the past three months, surpassing the S&P 500 Index’s ($SPX) 3.5% returns over the same time frame.
Moreover, in the longer term, MO stock is up 35.9% on a YTD basis, outperforming SPX’s 15.7% gains. Shares of MO have increased 24.4% over the past 52 weeks, surpassing SPX’s returns over the same time frame.
To confirm the bullish trend, MO has been trading above its 200-day and 50-day moving averages since late April, with some fluctuations.
Despite the decline in cigarette consumption in the U.S., MO’s outperformance is primarily fueled by its strategic initiatives, including the successful diversification of its product portfolio into noncombustible, smoke-free products, including the NJOY e-vapor lines, coupled with enduring performance from its flagship brand, Marlboro. The company’s high dividend yield is also a factor behind the stock’s strong momentum.
However, the stock fell 3.1% following its mixed Q2 earnings release on Jul.31. The company’s revenue declined 4.6% year-over-year primarily due to reduced net revenues from the smokeable products unit, lowering investor sentiments surrounding the stock.
MO has outperformed its rival British American Tobacco p.l.c.’s (BTI) 18.1% gains over the past 52 weeks and 31.3% returns on a YTD basis. Despite MO’s outperformance relative to the broader market, analysts are cautious about its prospects. The stock has a consensus rating of “Hold” from the 11 analysts in coverage, and MO is trading above its mean price target of $48.83.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
