Should Altria Stock Be in Your Portfolio Ahead of Q1 Earnings?

Core Viewpoint - Altria Group, Inc. is set to report its first-quarter 2025 earnings, with expectations of a slight revenue decline but earnings growth compared to the previous year [1][2]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for first-quarter revenues is $4.6 billion, reflecting a 1.7% decline year-over-year [2]. - The earnings estimate has decreased by 2 cents to $1.17 per share, indicating a 1.7% growth from the same quarter last year [2]. - Altria has a trailing four-quarter average negative earnings surprise of 0.2%, but in the last quarter, it exceeded the consensus estimate by 1.6% [2]. Earnings Prediction Model - The current model does not predict a definitive earnings beat for Altria, as it has an Earnings ESP of -2.69% and a Zacks Rank of 3 (Hold) [3][4]. Strategic Focus - Altria's strategic transformation towards smoke-free products is a key focus, with efforts to expand its portfolio of reduced-risk offerings like NJOY e-vapor products and on! nicotine pouches [5]. - The "Optimize & Accelerate" initiative aims to modernize operations and enhance progress towards a smoke-free vision [5]. Performance Influences - Strength in smoke-free products is expected to positively impact first-quarter performance, although significant investments in R&D and marketing may affect profitability [6]. - The Smokeable Products segment remains crucial, contributing 88.1% of total revenues in Q4 2024, but faces challenges from declining cigarette volumes due to macroeconomic factors [7]. Valuation Analysis - Altria shares are trading at a forward 12-month price-to-earnings ratio of 10.99, below the Zacks Tobacco industry average of 14.86, indicating attractive valuation for investors [8]. - Compared to competitors, Altria's valuation is lower than Philip Morris International (P/E of 22.74) and Turning Point Brands (P/E of 16.72), while British American Tobacco trades at a P/E of 9.23 [10]. Stock Performance - Over the past three months, Altria stock has returned 9.8%, underperforming the industry gain of 20.8% but outperforming the S&P 500's decline of 11% [11]. - Altria has shown relative strength compared to peers like Turning Point Brands and British American Tobacco, but Philip Morris has outperformed with a 30.4% gain [11]. Investment Outlook - Altria's attractive valuation, defensive sector positioning, and stable performance make it a compelling choice for long-term investors in the tobacco sector [13].