Yahoo Finance Altria (MO) Lowers EPS View on Closing NJOY Holdings' Buyout
With consumers’ rising health consciousness, several tobacco companies are focusing on reduced-risk or smoke-free options. Taking another step toward its goal of “Moving Beyond Smoking”, Altria Group, Inc. MO concluded the buyout of NJOY Holdings, Inc. Accordingly, management updated its adjusted earnings per share (EPS) guidance for the full-year 2023.
Altria is committed to responsibly speeding up the U.S. adoption of NJOY ACE, which is presently the only pod-based e-vapor product with FDA’s marketing approval. Its revised guidance includes targeted investments to support the U.S. commercialization of NJOY ACE.
Updated View
Altria now envisions the full-year adjusted EPS in the band of $4.89-$5.03, calling for 1-4% growth from the year-ago period adjusted EPS of $4.84. In its first-quarter 2023 earnings release, the company projected adjusted EPS in the range of $4.98-$5.13, suggesting growth of 3-6% from the 2022 figure.
The updated guidance includes investments involving continued smoke-free product research, development and regulatory preparation costs, the improvement of the digital consumer engagement system and marketplace activities to support the company’s smoke-free products (which include the U.S. commercialization of NJOY ACE).
Moreover, Altria expects amortization charges of about $50 million in the remainder of 2023, which is included in the lowered EPS view. It now expects full-year 2023 depreciation and amortization expenses of nearly $280 million. Altria continues to anticipate a full-year adjusted effective tax rate of 24.5-25.5% and capital expenditures in the band of $175-$225 million.
MO continues assessing external environmental factors like increased inflation, higher interest rates, global supply-chain hurdles and adult tobacco consumer (ATC) dynamics, such as purchasing patterns, the adoption of smoke-free products and disposable income.
Shares of Altria have dipped 2.5% year to date compared with the industry’s decline of 12.2%
Image Source: Zacks Investment Research
More on the NJOY Buyout
Financial results for NJOY will be reported under Altria’s “All Other" category from the second quarter of 2023. The acquisition, which was concluded through cash, term loan and commercial paper, is expected to boost cash flow in 2025 and adjusted EPS in 2026.
NJOY, LLC, a wholly owned subsidiary of Altria, will be marketing NJOY e-vapor products. Management stated that it has already identified about 70,000 U.S. retail stores (including existing stores) for the initial expansion phase of NJOY ACE. This buyout is likely to solidify NJOY’s global supply chain and facilitate volume growth.
Meanwhile, the buyout bodes well for Altria as it is likely to strengthen the company’s portfolio and fuel revenues. Management recently highlighted its 2028 Enterprise Goals at its 2023 Investor Day. As part of this, U.S. smoke-free volumes are expected to grow by at least 35% from the 2022 level of 800 million units. Management targets nearly doubling its smoke-free net revenues to $5 billion from the 2022 level.
This Zacks Rank #3 (Hold) company’s expansion efforts keep it well-positioned to maintain pace with evolving consumer trends.
Solid Staple Bets
Some better-ranked consumer staple stocks are Lamb Weston LW, Conagra Brands CAG and General Mills GIS.
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS suggests an increase of 116.8% from the year-ago reported number.
Conagra Brands, which operates as a consumer-packaged goods food company, currently sports a Zacks Rank #1. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests
increases of 7.1% and 16.5%, respectively, from the year-ago reported numbers.
General Mills, a food and beverage product company, currently has a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Altria Group, Inc. (MO) : Free Stock Analysis Report
General Mills, Inc. (GIS) : Free Stock Analysis Report
Conagra Brands (CAG) : Free Stock Analysis Report
Lamb Weston (LW) : Free Stock Analysis Report
