Marlboro Lights It Up for Altria

A lot can change in a year. Last October, Altria (NYSE: MO  ) delivered a meager net profit growth of 1.7%.

This time around, Altria is singing a different tune, with reported EPS growth of 28.6% for the quarter. The Marlboro Man is leading the charge, serving up a 0.7 share point increase in the cigarette segment. Even though overall cigarette volume dropped by 2.4% for the quarter, Altria demonstrated pricing power with a 1.8% increase in revenue and 4% increase in revenue excluding excise taxes.

Altria continued to grow its smokeless tobacco business with a 10.5% increase in revenue and 16.4% increase in segment volume. Altria's wine business (gained through the UST deal) has remained a small piece of Altria's pie with an overall revenue increase of 4.9%. The company's focus on cost control allowed it to deliver a 27.4% increase in operating income. SABMiller (OTC: SBMRY.PK) continues to boost Altria results with the balance sheet value of Altria's investment in the company increasing by 7.9% in the past nine months.

Patient shareholders (like the Fool itself) have certainly reaped the rewards as Altria's stock price has leaped almost 44% in the last year. Everyone thought Altria's second-cousin-once-removed Philip Morris International (NYSE: PM  ) would be the best bet for growth once it spun itself off from Altria, but Altria has significantly outpaced PMI in the past year. Altria continues to do well against competitors Lorillard (NYSE: LO  ) , Reynolds American (NYSE: RAI  ) , and The Vector Group (NYSE: VGR  ) .

So much for the argument that declining industries are poor investments.

In addition to its strong earnings growth, Altria boosted dividend rates twice in 2010 with an overall dividend increase of 11.8% this year and an annualized yield of 6.1%. If you don't mind living with the "sinners," Altria's strong dividend and continued focus on the bottom line certainly make the stock worth considering for long-term investment purposes.

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Fool contributor Colleen Paulson does not hold positions in any of the stocks mentioned in this article. Philip Morris International is a Motley Fool Global Gains pick. The Fool owns shares of Altria and Philip Morris International. For more investing strategies, take a look at the Motley Fool's newsletters via a 30-day free trial. The Fool has a disclosure policy.


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  • Report this Comment On October 27, 2010, at 12:23 AM, rwwww wrote:

    But which is it...MO or PM that's performed best since the PM spin? 3/30/2008

    Well...it turns out that PM is UP +21.05%...and

    MO is UP +16.44

    PM is still the PONY for the long haul.

    Through close of market on Tuesday, October 26, 2010.

  • Report this Comment On October 27, 2010, at 12:26 AM, rwwww wrote:

    BTW...KFT...the old grey mare...is up +3.79% for the same period. Glad I moved all the KFT shares to PM.

    KFT is headed for the glue factory...NOT the chocolate factory.

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