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Tobacco Stocks Set To Light Up
Tobacco stocks have proven to be among the most resilient, recession proof equities for quite some time now. Several of these names are now trading near their highest levels ever. Most of the biggest players in the industry will be reporting their quarterly results in the coming days. Here is what investors can expect to hear.
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Pricing Power
Before the opening bell on Thursday of next week, Altria (NYSE:MO) will announce the results of its Q1. Analysts are calling for the company to report about a 10% improvement in earnings per share (EPS) on a 1.5% increase in total sales. Recently, estimates have been spot-on, as the consensus has not varied by more than a penny in any of the last four quarters.
The company suffered slight declines in cigarette volumes last year, but was able to offset this trend with higher pricing. Altria's stock price is up roughly 6.2% so far in 2012 and it has outperformed the S&P 500 in each of the last twelve years. The stock's dividend yield sits at a rich 5.2%.
The former international segment of Altria, which was split off in 2008, has also been at the top of its game. Philip Morris International (NYSE:PM) has made particularly large gains in Asia, with major volume gains in Indonesia. The company has also been ahead of target with its cost savings initiative, which it hopes will net $300 million in productivity gains this year.
SEE: Can Earnings Guidance Accurately Predict The Future?
Lighting up
Prior to the market open on Tuesday of next week, Reynolds American (NYSE:RAI) will push forward with the release of its Q1 earnings. Analysts are predicting that the company will come in with EPS of 65 cents, compared to 64 cents in the year-ago quarter. Total revenue is expected to remain flat.
The company has experienced trends similar to those of Altria and other domestic cigarette makers, with stronger pricing picking up the slack for volume declines. Reynolds American has seen its stock price remain relatively flat this year, but it is up around 13.9% from a year ago.
One other tobacco stock on the earnings radar is Greensboro-based Lorillard (NYSE:LO), which is slated to announce its Q1 results on Wednesday morning of next week. The consensus on the street is that the company will report about a 16% jump in EPS on a 13.5% advance in total revenue. Shares of Lorillard have rallied nearly 21% year-to-date.
SEE: Big Dividends In Big Tobacco
The Bottom Line
Volume declines for these tobacco companies are nothing new. They have been a common trend for some time now. Fortunately, the remaining customers are willing to shoulder a heavier cost burden than they have in the past. When these companies report their earnings, the results may not be earth scorching, but they will continue to keep the stock prices moving higher.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Billy Fisher did not own shares in any of the companies mentioned in this article.
Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.
Pricing Power
Before the opening bell on Thursday of next week, Altria (NYSE:MO) will announce the results of its Q1. Analysts are calling for the company to report about a 10% improvement in earnings per share (EPS) on a 1.5% increase in total sales. Recently, estimates have been spot-on, as the consensus has not varied by more than a penny in any of the last four quarters.
The company suffered slight declines in cigarette volumes last year, but was able to offset this trend with higher pricing. Altria's stock price is up roughly 6.2% so far in 2012 and it has outperformed the S&P 500 in each of the last twelve years. The stock's dividend yield sits at a rich 5.2%.
The former international segment of Altria, which was split off in 2008, has also been at the top of its game. Philip Morris International (NYSE:PM) has made particularly large gains in Asia, with major volume gains in Indonesia. The company has also been ahead of target with its cost savings initiative, which it hopes will net $300 million in productivity gains this year.
SEE: Can Earnings Guidance Accurately Predict The Future?
Prior to the market open on Tuesday of next week, Reynolds American (NYSE:RAI) will push forward with the release of its Q1 earnings. Analysts are predicting that the company will come in with EPS of 65 cents, compared to 64 cents in the year-ago quarter. Total revenue is expected to remain flat.
The company has experienced trends similar to those of Altria and other domestic cigarette makers, with stronger pricing picking up the slack for volume declines. Reynolds American has seen its stock price remain relatively flat this year, but it is up around 13.9% from a year ago.
One other tobacco stock on the earnings radar is Greensboro-based Lorillard (NYSE:LO), which is slated to announce its Q1 results on Wednesday morning of next week. The consensus on the street is that the company will report about a 16% jump in EPS on a 13.5% advance in total revenue. Shares of Lorillard have rallied nearly 21% year-to-date.
SEE: Big Dividends In Big Tobacco
The Bottom Line
Volume declines for these tobacco companies are nothing new. They have been a common trend for some time now. Fortunately, the remaining customers are willing to shoulder a heavier cost burden than they have in the past. When these companies report their earnings, the results may not be earth scorching, but they will continue to keep the stock prices moving higher.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Billy Fisher did not own shares in any of the companies mentioned in this article.
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