Altria Group (MO) Buy or Sell Stock Guide
Are you looking for the analysis of Altria Group (MO) stock? Are you wondering what the bulls and the bears say about it?
If so, you came to the right place. In this stock guide, we will share with you 8 reasons to buy and 6 reasons to sell MO stock. You’ll get a perspective on what the bulls and the bears say about it.
The analysis below may be also 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 / investment?
- What are MO analyst opinions, recommendations and ratings?
Let’s start with the bull case. Here are the reasons to buy MO stock:
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 5.57%, higher than the industry (0.28%) and sector (0.55%) forward dividend yields. See MO forward dividend chart.
5. MO forward P/E ratio is 11.94, and it’s low compared to its industry peers’ P/E ratios. See MO forward P/E ratio chart.
6. MO PEG ratio (P/E adjusted for growth) is 1.78, and it’s low compared to its industry peers’ PEG ratios. See MO PEG chart.
7. MO average analyst rating is Buy. See MO analyst rating chart.
8. MO average analyst price target ($58.47) is above its current price ($52.11). See MO price target chart.
Now that you understand the bull case, let’s look at the reasons to sell MO stock (i.e., the bear case):
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 -6.00%, lower than the industry and sector average revenue growth (5.45% and 3.51%, respectively). See MO revenue growth chart.
5. MO profitability is declining. The YoY profit margin change was -15.34percentage points. See MO profitability chart.
6. MO Price/Sales ratio is 5.16, and it’s high compared to its industry peers’ P/S ratios. See MO forward Price/Sales ratio chart.
Now let's look at the key statistics for MO:
|Average Price Target / Upside||$58.47 / 11.63%|
|Average Analyst Rating||Buy|
|Number of Employees||8,300|
|Forward P/E Ratio||11.58|
|YoY Quarterly Revenue Growth||-6%|
What are your thoughts on MO?
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