Altria Reaffirms 2016 View at Consumer Staples Conference

Altria Group Inc. MO reaffirmed its full-year 2016 outlook and outlined its financial goals during the Consumer Staples Group conference held on Sep 7.

The Marlboro owner maintained its 2016 adjusted earnings per share range of $3.01–$3.07 which was announced in the second quarter conference call. This range represents a growth of 7.5%–9.5% from the adjusted diluted earnings per share of $2.80 posted in 2015.

Management declared that its objective is to achieve adjusted earnings of 7% to 9% in the long term. It also stated its target of maximizing shareholders return and achieving an 80% dividend payout ratio with its cash.

ALTRIA GROUP Price and Consensus

ALTRIA GROUP Price and Consensus | ALTRIA GROUP Quote

With regard to this, Altria has been consistently returning value to its shareholders through dividends. Last month, Altria announced an 8% hike in its quarterly dividend to 61 cents per share. The new dividend will be paid on Oct 11 to its shareholders on record as of Sep 15, 2016.

The annualized dividend now amounts to $2.44 per share with a dividend yield of 3.7%, based on Altria’s closing price of $66.33 as of Aug 19, 2016. Last year, the company increased its dividend by 8.7%.

In the conference call, Altria also stated that it continues to focus on its core tobacco business, and carry on innovations in alternative tobacco products. Additionally, Altria stated that it is well on track to achieve its goal of $300 million in annual productivity savings by the end of 2017. Part of the savings generated through this initiative announced in Jan 2016 is to be realized through reduced spending on certain infrastructure and will be invested in brand building and regulatory capabilities.

Altria Group made a strong start to 2016 recording both higher earnings and sales backed by strong pricing power and better-than-expected volume growth in first-half 2016. The results were primarily aided by lower excise tax, gross profit and operating income increased year over year during the period.

However, the tobacco industry is facing declining volumes as tobacco companies like Philip Morris International Inc. PM, British American Tobacco p.l.c. BTI and Reynolds American Inc. RAI are facing the brunt of litigations and worldwide anti-tobacco campaigns.

Altria has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
ALTRIA GROUP (MO): Free Stock Analysis Report
 
PHILIP MORRIS (PM): Free Stock Analysis Report
 
REYNOLDS AMER (RAI): Free Stock Analysis Report
 
BRITISH AM TOB (BTI): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research