Altria Group (MO) Buy or Sell Stock Guide
The analysis below may be helpful to you if you have any of the following questions about MO stock:
- Is MO a buy or a sell?
- Should I sell or hold MO stock today?
- Is MO a good buy / a good investment?
- What are MO analyst opinions, recommendations, ratings?
Here are MO stock buy reasons/signals:
1. Altria is the largest player in the U.S. tobacco market, with over 50% share. The company's addictive products and powerful brands enjoy robust pricing power.
2. Marlboro has been the dominant cigarette brand in the U.S. for three decades and currently has a 44% share. As marketing restrictions become tighter over time, it may become difficult for competitors to erode Marlboro’s brand power.
3. The firm’s relatively low capital requirements allow it to return significant capital to shareholders in the form of an 80% dividend payout ratio.
4. MO forward dividend yield is 4.95%, higher than the industry (1.59%) and sector (0.83%) forward dividend yields.
5. MO forward P/E ratio is 14.67, and it’s low compared to its industry peers’ P/E ratios.
6. MO PEG ratio (P/E adjusted for growth) is 1.59, and it’s low compared to its industry peers’ PEG ratios.
7. MO average analyst rating is Buy.
Here are MO stock sell reasons/signals:
1. Altria does not have any international exposure, and the U.S. cigarette industry is in long-term decline because of health concerns and strict marketing restrictions. We expect U.S. consumption to fall 3%-4% annually.
2. Restrictions imposed by the FDA could hamper manufacturers' efforts to diversify their product lines, and municipalities may continue to restrict smoking in public places.
3. Altria has been slower to roll out its innovative products domestically and is behind Reynolds’ Vuse in market share.
4. MO quarterly revenue growth was -3.70%, lower than the industry and sector average revenue growth (5.05% and 5.32%, respectively).
5. MO profitability is declining. The YoY profit margin change was -15.34pp.
6. MO Price/Sales ratio is 6.18, and it’s high compared to its industry peers’ P/S ratios.
7. MO short interest (days to cover the shorts) ratio is 3.65. The stock garners more short interest than the average industry, sector or S&P 500 stock.
What are your thoughts on MO?
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