Altria Earnings: Recent Trends Intact as Cigarette Volume Continues to Contract

Altria reported 2023 adjusted earnings per share of $4.95, slightly better than our forecast and close to the midpoint of guidance, but cigarette volume was again a little light. The upside to earnings was driven by lower operating costs, which indicates sound execution but does not solve the accelerated volume decline rate, the key concern for investors in U.S. tobacco. We retain our $52 per share valuation and our wide moat rating. The stock was trading at 8 times the midpoint of 2024 earnings guidance during early trading on Feb. 1, implying a dividend yield of 10%, which we believe undervalues the cash flows the business is likely to generate in the future.