Tobacco Sales Keep on Plugging at Altria, but Shares Are Overvalued
Altria rebounded from a first quarter that was pressured by a product recall to post nearly 4% year-over-year revenue growth (excluding excise taxes) in the second quarter, largely driven by the pricing power that underlies its brand intangible assets and our wide moat. While we don’t anticipate significant changes to our projections, we will likely raise our $59 fair value modestly after incorporating recent results and our expectation for U.S. corporate tax reform in 2018. Even so, we view sha...Altria Group is a holding company. The company's subsidiaries include: Philip Morris USA Inc., which is engaged in the manufacture and sale of cigarettes; John Middleton Co., which is engaged in the manufacture and sale of machine-made cigars and pipe tobacco; Sherman Group Holdings, LLC and its subsidiaries, which are engaged in the manufacture and sale of cigarettes and the sale of cigars; and UST LLC, which through its subsidiaries, including U.S. Smokeless Tobacco Company LLC and Ste. Michelle Wine Estates Ltd., is engaged in the manufacture and sale of smokeless tobacco products and wine. The products of the company's tobacco subsidiaries include smokeable tobacco products and machine-made cigars.
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