ATML Earnings Action

Altria Group Inc. (MO) shares are under some pressure after the U.S. Supreme Court ruled that consumers can sue tobacco companies under state unfair-trade laws despite cigarette labeling being regulated by the Federal Trade Commission. Altria’s legal department was quick to point out that while the lawsuits may proceed, the plaintiffs must still prove the company’s use of use of ‘lights’ and ‘lowered tar’ descriptors actually violated state deceptive practices statute. From an investor standpoint, a single digit PE and an 8.3% dividend yield seen as rock-solid should minimize those concerns. That was partially why J.P Morgan securities analyst Erik Bloomquist raised his rating on Altria to “overweight.” According to wire reports, he cited higher retail prices that would outweigh volume declines, buybacks that would lift earnings per share numbers, and significant cash returns to shareholders. The upgrade is being overlooked today and getting lost in the news cycle, but it shouldn’t be.