MO – Market expectations are for Uniform ROA to fade, but management may have concerns about about growth, movies, and subscriptions

February 10, 2022

  • Altria Group (MO) currently trades well below corporate and historical averages relative to Uniform earnings, with an 10.2x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to decline to 179%, accompanied by 3% Uniform asset growth.
  • However, analysts expect Uniform ROA to improve to 399% in 2022, accompanied by 4% Uniform asset shrinkage.
  • If sustained going forward, these levels would imply a stock price closer to $87, representing significant equity upside for the firm.
  • Moreover, management is confident about regulatory proceedings, JUUL, and tobacco volume.

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