Will Altria Burn Its Investors?

December 23, 2012

Page 2 of 3

E = Equity to Debt Ratio Is Weak

The debt-to-equity ratio for Altria is high, especially when compared to the debt-to-equity ratio for Reynolds American (NYSE:RAI). Altria’s balance sheet is also weaker than the balance sheets for Reynolds American and Lorillard (NYSE:LO).

	Debt-To-Equity	Cash	Long-Term Debt
MO	3.59	$2.19 Billion	$13.88 Billion
RAI	.56	$1.24 Billion	$3.19 Billion
LO	N/A	$1.72 Billion	$3.12 Billion

T = Technicals on the Stock Chart Are Strong

Altria has performed extremely well over the past three years. Reynolds American and Lorillard haven’t been far behind.

	1 Month	Year-To-Date	1 Year	3 Year
MO	4.34%	14.28%	17.87%	98.48%
RAI	3.90%	6.90%	8.90%	88.37%
LO	2.01%	6.99%	12.90%	75.19%

At $32.59, Altria is currently trading lower than all its averages.

50-Day SMA	32.70
100-Day SMA	33.61
200-Day SMA	32.99

E = Earnings and Revenue Have Been Inconsistent

The poor revenue growth is cause for some concern, but Altria is still very profitable.

	2007	2008	2009	2010	2011
Revenue ($)in billions	18.66	19.36	23.56	24.36	23.80
Diluted EPS ($)	4.62	2.36	1.54	1.87	1.64

Looking at the last quarter on a YoY basis, we see an increase in revenue, but a drop in earnings.

	9/2011	12/2011	3/2012	6/2012	9/2012
Revenue ($)in billions	6.11	6.13	5.65	6.49	6.24
Diluted EPS ($)	.57	.41	.48	.60	.32

Page 2 of 3

view all

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com