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Will Pricing be an Upside for Altria (MO) in Q3 Earnings?

Zacks Equity Research

Altria Group, Inc. MO is slated to release third-quarter 2019 results on Oct 31, before the opening bell. The company’s earnings were in line with the Zacks Consensus Estimate in the last reported quarter. Let’s discuss the factors that are likely to get reflected on the upcoming quarterly release.

What to Expect?

The Zacks Consensus Estimate for third-quarter 2019 earnings has been stable in the past 30 days at $1.41, which suggests an improvement of 5.6% from the year-ago quarter’s reported figure. The consensus mark for revenues is pegged at $5,281 million, which suggests a decline of 0.2% from the prior-year quarter’s level.

Altria Group, Inc. Price, Consensus and EPS Surprise


Altria Group, Inc. Price, Consensus and EPS Surprise

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


Key Factors

Advancement in the smokeless arena and gains from strategic pricing are likely to have supported Altria’s performance in the third quarter. Notably, revenues in the smokeless category have been rising on the back of consumers’ growing interests in low risk tobacco alternatives. Moreover, the company’s stakes in Cronos Group CRON and Burger Group are expected to have made favorable contribution. Other tobacco giants such as Philip Morris PM and British American Tobacco BTI are also undertaking efforts to boost presence in the smokeless arena.

However, regulatory headwinds, especially in the cigarette category, are a major concern. Strict regulatory and marketing norms along with consumers’ rising health consciousness have been denting Altria’s cigarette shipment volumes. This along with sluggishness in the wine category is expected to have made a negative impact on the company’s top line in the third quarter.

Nonetheless, prudent product pricing in the smokeable and smokeless segments, has been aiding Altria’s adjusted OCI growth. Also, the company’s cost-reduction initiatives (including efforts to reduce third-party spending) as well as gains from investment in AB InBev are likely to have contributed to the company’s third-quarter performance.

What the Zacks Model Unveils

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

Altria carries a Zacks Rank #3 and an Earnings ESP of +1.75%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Altria Group, Inc. (MO) : Free Stock Analysis Report
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