The market was clearly impressed how management is coping with the company’s challenging situation.
On Thursday, good news from one of the market’s favorite “sin stocks” drove its share price up by almost 8%. This lucky company was Altria (MO 7.84%); the cigarette maker’s latest quarterly earnings report was received most favorably by market players. The stock’s pop on the day was in market contrast to the 1.9% slump of the benchmark S&P 500 index.
Slight increases and modest beats
That morning, Altria released its third-quarter figures, which were slightly higher than the consensus analyst estimates. The tobacco giant also reaffirmed its existing full-year guidance.
The quarter saw the company book $5.34 billion in net revenue, which was up by 1% from the same period of 2023. Meanwhile, non-GAAP (adjusted) net income improved over that time span, rising by nearly 4% to a shade under $2.36 billion ($1.38 per share).
Both headline numbers topped pundit projections, although not spectacularly. The consensus analyst expectation for revenue was $5.32 billion, and that for adjusted profitability was $1.35 per share.
For years, Altria has been contending with precipitous declines in the traditional cigarette market due to a general consumer move to more healthy lifestyle choices (in addition to concentrated anti-smoking efforts by authorities). However, vaping products and other consumption alternatives have found quite a niche in the market.
The company did well with next-generation products during the quarter. Its shipment volume for NJOY electric cigarette and vaping products more than doubled on a year-over-year basis, and that for its on! nicotine pouches saw a 46% increase.
Full-year guidance maintained
Altria also maintained its adjusted net income guidance for the entirety of 2024; since this means growth over the 2023 numbers if fulfilled, the market found this encouraging. Management is expecting $5.07 to $5.15 per share for the line item, which would shake out to annual growth of at least 2.5%.
The company continues to do a decent job coping with the end of the Cigarette Era, although it remains to be seen whether next-generation products can ultimately offset the severe shrinking of the traditional segment.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.