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How Altria Group, Inc. (MO) Earnings Could Keep Shares Smoking

Altria Group IncAltria Group, Inc. (NYSE:MO) will release its quarterly report next Tuesday, and the stock has made its way higher to reach its best levels since the company spun off its interest in globally focused Philip Morris International Inc. (NYSE:PM). Even as usual concerns about the health impacts of tobacco, and regulatory pressure, continue to weigh on the industry, Altria earnings look poised to keep growing steadily.

Altria Group, Inc. (NYSE:MO)’s business is deceptively simple, obtaining tobacco and then imposing big markups in its well-marketed cigarettes and other tobacco products. Having largely avoided massive product lawsuit liability, Altria and its peers have rewarded long-term shareholders with huge dividend payouts throughout their history. Let’s take an early look at what’s been happening with Altria over the past quarter, and what we’re likely to see in its quarterly report.

Stats on Altria

Analyst EPS Estimate $0.63
Year-Ago EPS 6.8%
Revenue Estimate $4.62 billion
Change From Year-Ago Revenue 0.9%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

How will Altria earnings fare this quarter?
Analysts have largely kept their views on Altria Group, Inc. (NYSE:MO) earnings stable recently, with no change to their June-quarter estimates, and a single $0.01 per-share rise for consensus figures for the 2013 and 2014 years. The stock has continued its slow but steady ascent, rising about 6% since mid-April.

The simple story of Altria’s success generally involves making the most of its opportunity for as long as it lasts. Even as revenue has been flat, and volumes of its premium Marlboro brand have dropped substantially in recent years, the company has nevertheless used a combination of cost-cutting and higher sales prices to keep its margins rising and ensure growth in profits.

Nevertheless, Altria Group, Inc. (NYSE:MO) has continued feeling the pinch of greater regulation and higher excise taxes. Proposals in the Obama administration’s budget to raise cigarette taxes by another $0.94 per pack would give Altria and its peers even greater headaches, and even though the budget seems unlikely to pass, regulatory threats, and anti-smoking campaigns, continue to weigh on Altria’s future prospects.