We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Time to Buy These Big Tobacco Stocks for Higher Highs?
Read MoreHide Full Article
Big tobacco producers Altria Group (MO - Free Report) and Philip Morris International (PM - Free Report) ) have seen their stocks soar over +30% this year.
With both stocks offering lucrative dividends and trading near 52-week highs they may certainly be catching investors' attention. That said, let’s see if it’s time to buy Philip Morris or Altria's stock for higher highs.
Image Source: Zacks Investment Research
Increased Profitability
Complimenting Philip Morris and Altria’s market position as tobacco producers has been the adoption of smoke-free products.
This is also aiding their expansion into Europe among other international markets with heated non-burn tobacco, vapor, and oral nicotine products leading to increased profitability. Correlating with such, it’s noteworthy that the Zacks Tobacco Industry is currently in the top 10% of over 250 Zacks industries.
Based on Zacks estimates, Altria’s annual earnings are now expected to be up 3% in fiscal 2024 and are projected to rise another 4% in FY25 to $5.30 per share. Plus, FY25 EPS projections would represent 25% growth from pre-pandemic levels with Altria’s earnings at $4.22 per share in 2019.
Image Source: Zacks Investment Research
Turning to Philip Morris, its bottom line is expected to expand 7% this year with annual earnings slated to increase another 10% in FY25 to $7.10 per share. Even better, FY25 EPS projections for Philip Morris would reflect 37% post-pandemic growth with earnings at $5.19 a share in 2019.
Image Source: Zacks Investment Research
Valuation Comparison
Trading around $54, Altria’s stock is at a 10.6X forward earnings multiple which is a slight discount to the industry average of 12.7X. At $125, Philip Morris shares trade at 19.5X forward earnings, a premium to the industry and Altria but beneath the S&P 500’s 23.2X.
Image Source: Zacks Investment Research
Lucrative Dividends
The sizable dividends these big tobacco producers offer have kept investors intrigued regarding Philip Morris and Altria’s stronger earnings outlook.
While Philip Morris has the edge at the moment regarding its bottom-line expansion, Altria’s annual dividend yield of 7.25% bolsters its more affordable valuation. This trumps the industry average of 5.74% and Philip Morris at 4.14% although both tobacco giants have yields that tower over the S&P 500’s 1.28% average.
Furthermore, Altria is considered a Dividend King with the company raising its payout for more than 50 consecutive years.
Image Source: Zacks Investment Research
Bottom Line
Attributed to its more attractive earnings outlook, Philip Morris International’s stock sports a Zacks Rank #2 (Buy) with Altria Group landing a Zacks Rank #3 (Hold).
Earnings estimate revisions for FY24 have remained higher for Philip Morris as well while Altria’s have slightly declined. However, both of these big tobacco stocks remain viable long-term investments considering their enticing dividends and reasonable valuations.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Time to Buy These Big Tobacco Stocks for Higher Highs?
Big tobacco producers Altria Group (MO - Free Report) and Philip Morris International (PM - Free Report) ) have seen their stocks soar over +30% this year.
With both stocks offering lucrative dividends and trading near 52-week highs they may certainly be catching investors' attention. That said, let’s see if it’s time to buy Philip Morris or Altria's stock for higher highs.
Image Source: Zacks Investment Research
Increased Profitability
Complimenting Philip Morris and Altria’s market position as tobacco producers has been the adoption of smoke-free products.
This is also aiding their expansion into Europe among other international markets with heated non-burn tobacco, vapor, and oral nicotine products leading to increased profitability. Correlating with such, it’s noteworthy that the Zacks Tobacco Industry is currently in the top 10% of over 250 Zacks industries.
Based on Zacks estimates, Altria’s annual earnings are now expected to be up 3% in fiscal 2024 and are projected to rise another 4% in FY25 to $5.30 per share. Plus, FY25 EPS projections would represent 25% growth from pre-pandemic levels with Altria’s earnings at $4.22 per share in 2019.
Image Source: Zacks Investment Research
Turning to Philip Morris, its bottom line is expected to expand 7% this year with annual earnings slated to increase another 10% in FY25 to $7.10 per share. Even better, FY25 EPS projections for Philip Morris would reflect 37% post-pandemic growth with earnings at $5.19 a share in 2019.
Image Source: Zacks Investment Research
Valuation Comparison
Trading around $54, Altria’s stock is at a 10.6X forward earnings multiple which is a slight discount to the industry average of 12.7X. At $125, Philip Morris shares trade at 19.5X forward earnings, a premium to the industry and Altria but beneath the S&P 500’s 23.2X.
Image Source: Zacks Investment Research
Lucrative Dividends
The sizable dividends these big tobacco producers offer have kept investors intrigued regarding Philip Morris and Altria’s stronger earnings outlook.
While Philip Morris has the edge at the moment regarding its bottom-line expansion, Altria’s annual dividend yield of 7.25% bolsters its more affordable valuation. This trumps the industry average of 5.74% and Philip Morris at 4.14% although both tobacco giants have yields that tower over the S&P 500’s 1.28% average.
Furthermore, Altria is considered a Dividend King with the company raising its payout for more than 50 consecutive years.
Image Source: Zacks Investment Research
Bottom Line
Attributed to its more attractive earnings outlook, Philip Morris International’s stock sports a Zacks Rank #2 (Buy) with Altria Group landing a Zacks Rank #3 (Hold).
Earnings estimate revisions for FY24 have remained higher for Philip Morris as well while Altria’s have slightly declined. However, both of these big tobacco stocks remain viable long-term investments considering their enticing dividends and reasonable valuations.