Altria Group Inc. (NYSE:MO) core business is holding steady amid the COVID-19 shocks, if its fourth-quarter and full-year earnings are anything to go by. Fourth-quarter earnings and revenues topping analysts’ estimates and the company eyeing new cigarette investments affirm resiliency amid a challenging Macro environment.
Earnings Beat
The Marlboro maker reported net income of $1.92 billion or $1.03 a share up from a net loss of $1.8 billion or $1 a share reported a year earlier. Sales were up by 5% to $6.3 billion from $6.01 billion reported a year earlier and above estimates of $5.01 billion. Full-year revenues were up 5% mostly helped by higher pricing and partially offset by higher promotional investments.
For the current year, the Richmond VA Company expects earnings of between $4.49 to $4.62 a share implying a 35 to 6% increase. Expenditures are expected at between $200 million and $250 million and an amortization expense of about $250 million.
Altria 2021 Plans
With the tobacco business showing signs of resiliency amid the pandemic, focus shifts towards the 10-year vision of responsibly transitioning adult smokers to non-combustible future. The company is pouring billions of dollars towards developing alternative products in a bid to avert the notion of being the catalyst behind cancer-causing cigarettes.
Likewise, Altria has affirmed its commitment to returning value to shareholders; the company’s board has already approved a new $2 billion share-repurchase program to be completed mid-2020. The share repurchases will depend on market conditions, among other factors.
Similarly, it has retained its annualized dividend rate of $3.44 a share representing an 8.2% dividend yield. The company has a long term objective of a dividend payout target of about 80% of adjusted EPS.
Altria is a potential bounce-back play a potential bounce-back play after coming under pressure in the first half of 2020 and rebounding slightly in the second half. The stock his yet to recoup all the losses accrued in 2020 as the bounce-back continues to gather pace at the back of impressive Q4 and full-year earnings results.