Altria Earnings: Cigarette Volumes Down, but Guidance for Full-Year EPS Growth Reaffirmed

Wide-moat Altria reported first-quarter results with few surprises. Net revenue declined 2.5% year over year to $5.6 billion, mostly from lower cigarette volumes and higher promotion partially offset by higher prices. Adjusted diluted EPS declined by a similar rate to $1.15. Still, the company maintained full-year adjusted diluted EPS guidance of $5.05-$5.17, which implies growth of 2.5% to 4%. This outlook remains reasonable to us, as the back half of the year should benefit from two additional shipping days and the company laps the NJOY acquisition. We don’t expect to make a significant change to our fair value estimate of $49 per share and think shares remain undervalued.