Altria Group (MO) Stock Climbs After Court Throws Out Billion Dollar Judgement

Altria Group (MO) shares closed trading up after the company once again had a $10 billion judgement against it thrown out.
By Tony Owusu ,

NEW YORK (TheStreet) -- Shares of Altria Group (MO) - Get Report  closed trading up by 0.31% to $58.03 on Wednesday, after the Illinois Supreme Court ruled in favor of the company, vacating an appellate court's ruling to reinstate a multi-billion dollar judgement against Altria.

The case in question began in 2000 and alleged that the company's Phillip Morris unit mislead smokers about the health risks of light cigarettes. 

An Illinois court originally awarded plaintiffs a $10.1 billion judgement against the company, with $1.7 billion of the judgement going to the plaintiff's attorneys.

The class-action suit was brought on behalf of 1.4 million Illinois smokers who were looking to recoup the money spent on the cigarettes.  

The suit was originally dismissed by the Illinois Supreme Court in 2003, but was reinstated by an appellate court in 2014.

The Supreme Court ruled 4-2 today that the lower court did not have the authority to overturn its previous ruling. 

Separately, TheStreet Ratings team rates ALTRIA GROUP INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

We rate ALTRIA GROUP INC (MO) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, growth in earnings per share, increase in net income and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 14.5%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ALTRIA GROUP INC has improved earnings per share by 9.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALTRIA GROUP INC increased its bottom line by earning $2.57 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($2.81 versus $2.57).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Tobacco industry average. The net income increased by 9.4% when compared to the same quarter one year prior, going from $1,397.00 million to $1,528.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Tobacco industry and the overall market, ALTRIA GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ALTRIA GROUP INC is rather high; currently it is at 61.07%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 30.69% trails the industry average.
  • You can view the full analysis from the report here: MO

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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