Altria Group Stock: Is MO Outperforming the Consumer Defensive Sector?
With a market cap of $102.1 billion, Altria Group, Inc. (MO) manufactures and sells smokeable and oral tobacco products in the United States. Founded in 1822, the Richmond, Virginia-based company offers cigarettes primarily under the Marlboro brand; large cigars and pipe tobacco under the Black & Mild brand, and more.
Companies worth $10 billion or more are generally described as "large-cap stocks." MO fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size and influence in the tobacco industry. MO benefits from being one of the largest tobacco companies in the world, owning Philip Morris USA, the most profitable U.S. cigarette manufacturer, and John Middleton, a leading U.S. cigar manufacturer.
The company has pulled back 1.5% from its 52-week high of $61.26, recorded on May 7. Shares of MO have increased 5.3% over the past three months, outperforming the Consumer Staples Select Sector SPDR Fund’s (XLP) marginal decrease over the same time frame.
Longer term, MO stock is up 15.5% on a YTD basis, significantly outpacing XLP’s 5.3% rise. Moreover, shares of the tobacco company have surged 29.7% over the past 52 weeks, compared to XLP’s 7.1% return over the same time frame.
To confirm its bullish trend, MO has been trading above its 200-day moving average since last year and over its 50-day moving average since late February, with some fluctuations.
MO shares grew 1% following the release of its Q1 earnings on Apr. 29. The company’s net revenues decreased 5.7% year-over-year to $5.3 billion and successfully beat the Street’s estimates. However, its operating margin came in at 34%, down from 56.7% in the previous year’s quarter. Additionally, the company’s adjusted earnings for the quarter increased 6% year-over-year to $1.23, surpassing the consensus estimates by 5.1%.
In the tobacco industry, its top rival, Philip Morris International Inc. (PM), has outperformed MO, with its shares surging 51.5% this year and 77.1% over the past 52 weeks.
Wall Street analysts are skeptical of MO’s prospects. The stock has a consensus “Hold” rating from the 12 analysts covering it. The stock is currently trading above its mean price target of $56.44.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
