Altria (NYSE: MO) is a $110 billion company today. Investors that bought shares one year ago are sitting on a -16.72% total return. That’s below the S&P 500’s return of 17.46%.
Altria stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Altria reported a recent EPS growth rate of -50.66%. That’s below the tobacco industry average of 27.01%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the tobacco industry is 64.34. And Altria’s ratio comes in at 17.10. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for Altria stock is 90.12%. That’s above the tobacco industry average of 71.58%. That’s not a good sign.
✓ Free Cash Flow per Share Growth: Altria has increased its FCF per share over the last year relative to its competitors. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth.
✓ Profit Margins: The profit margin of Altria comes in at 105.35% today. And generally, the higher, the better. We also like to see this ratio above competitors. Altria’s profit margin is above the tobacco average of 14%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Altria is 72.6% and that’s above the industry average ROE of 34.14%.
Altria stock passes four of our six key metrics today. That’s why our Investment U Stock Grader gives it a Buy with Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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