Thursday, January 29, 2009

Altria Earnings 1/29/09

Altria, owner of Phillip Morris USA, reported earnings in line with the street today. The company said the higher cigarette tax could impact volume for 2009. The company thinks earnings growth will be 8-10% for 2009. Altria will likely raise the prices on some brands to offset the higher tax imposed by the United States government. Profit for the fourth quarter was .37 cents, excluding one time items.

Altria recently aquired UST, leader in the smokeless tobacco market, for $10.4 billion. This acquistion will add to earnings in 2010 or possibly 2009. In my opinion this was a great move with the cash that Altria was sitting on.

The company suspended its share buyback program. Almost three billion was left on the current share repurchase agreement. This is fine as the company has said they will use the flexibility to help with the UST deal.

The company is expecting $1.70 to $1.75 earnings per share in 2009. Shares trade at just under $17 currently. This puts the stock in very cheap less than ten times 2009 earnings. I own shares of Altria and Phillip Morris, as a result of the spinoff. I bought some more shares of Altria today after the earnings. The stock is worth north of $20 easily. The UST deal will impact earnings in late 2009 or 2010. The company also owns part of SABmiller.

The yield is over eight percent and the dividend is currently .32 per quarter. The company has a history of raising its dividend and probably will since the share buyback was suspended. This is a very shareholder friendly company.

I have a price estimate of $25 by 05/05/10.

*Disclaimer-I own shares of Altria in real life.

Buy shares of Altria for $3.00 per trade.

1 comment:

  1. Good article and very valuable information. Keep it up!