Altria Group Inc. Stock Buy Recommendation Reiterated (MO)

NEW YORK ( TheStreet) -- Altria Group (NYSE: MO) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.

Highlights from the ratings report include:
    • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
    • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Tobacco industry average. The net income increased by 3.8% when compared to the same quarter one year prior, going from $937.00 million to $973.00 million.
    • Despite its growing revenue, the company underperformed as compared with the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
    • The gross profit margin for ALTRIA GROUP INC is rather high; currently it is at 56.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.40% is above that of the industry average.
    • 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. In comparison to other companies in the Tobacco industry and the overall market on the basis of return on equity, ALTRIA GROUP INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.

Altria Group, Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes, smokeless products, and wine in the United States and internationally. The company has a P/E ratio of 20, below the average tobacco industry P/E ratio of 20.2and above the S&P 500 P/E ratio of 17.7. Altria Group has a market cap of $68.51 billion and is part of the consumer goods sector and tobacco industry. Shares are up 13.6% year to date as of the close of trading on Wednesday.

You can view the full Altria Group Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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