Quick Read
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Altria (MO) reports Q3 earnings Oct. 29, with the stock up 35% year to date on Marlboro’s pricing strength offsetting cigarette volume declines.
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Marlboro’s retail share slipped from 40% to 40% to 39.5% as discount cigarettes captured 34% of the market, pressuring margins heading into Q3.
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After back-to-back earnings-day drops of 5% and 9%, a clean Q3 beat is critical as Altria’s $665M buyback authorization expires at year-end.
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Altria Group (NYSE:MO) reports third-quarter results before the open on October 29. The stock is up 35.13% year to date, so investors will be looking for proof that Marlboro pricing can keep outpacing cigarette volume losses.
Pricing Carried Q2, but Charges Spoiled the Headline
Last quarter, adjusted EPS of $1.48 missed the $1.4976 consensus, while revenue of $5.36B came in slightly ahead of estimates. Results absorbed $88M in USSTC consolidation charges and $95M in litigation costs. Shares fell 9.32% on report day.
Beneath the miss, pricing held up. Smokeable price realization reached 4.5%, Marlboro retail prices rose about 7%, and segment adjusted OCI margin expanded to 64.8%. Reported domestic cigarette volumes fell 3.2%, which management called the fourth consecutive quarter of moderating industry declines.
Management also raised the low end of full-year adjusted EPS guidance, putting the range at $5.61 to $5.72. Shares have gained 7.77% over the past month.
Wall Street Expects Modest Growth
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Marlboro Share and on! PLUS Will Decide the Story
Marlboro’s retail share is the first thing I’ll be watching. It slid from 40.4% a year ago to 39.5% last quarter, while the industry’s discount share rose to 33.8%. Altria is leaning on Basic and the new Marlboro Cowboy Cut to keep squeezed smokers inside its portfolio, but Basic faces tougher comparisons in the second half. Greater promotions could chip away at those margins.
