Few stocks have been as resilient in the face of adversity as Altria Group (MO 0.72%). Facing attacks from every corner, the tobacco giant has nevertheless managed to run a successful business, and investors have relied on Altria to keep delivering solid results year after year.

Coming into the company's third-quarter financial report, Altria investors had every expectation that the results would again reflect the tobacco-maker's ability to take full advantage of its opportunities, and Altria's report only confirmed their confidence in the company. Let's look more closely at the latest from Altria, and what conclusions you should draw from the report.


Image source: Altria.

Altria heats up

Altria's third-quarter results were solid in a way that longtime investors will find typical for the tobacco giant. Total revenue was up 3%, to $6.91 billion, and sales net of excise taxes came in at $5.19 billion, topping the consensus forecast by about $80 million. One-time charges from early extinguishment of debt sent GAAP net income down by roughly a quarter from year-ago levels, but adjusted earnings of $0.82 per share were better than the $0.80 figure that most investors were expecting to see.

Looking more closely at Altria's main segments, the smokeable products business rebounded from its declines during the second quarter. Revenue, net of excise taxes, rose 2.7%, and adjusted operating company income rose at a modest 4.2% clip. Cigarette shipment volume fell 1%, to 32.9 million units, with trade inventory movements actually preventing what otherwise would have been a more substantial decline of around 3%.

Those figures are in line with what the overall cigarette industry has seen, and improving cigar sales were able to offset the losses from cigarettes only to a limited extent. Despite the sluggish conditions, the key Marlboro brand powered cigarette market share gains of a tenth of a percentage point, coming in at 51.4%.

Elsewhere, the smokeless-products unit again stood out for its strong growth. Revenue, net of excise taxes, jumped 10%, and adjusted operating company income saw similar gains of 9%. Double-digit percentage growth in shipments of Copenhagen powered the segment's total volume higher by 5.6%, and overall retail share for Altria's smokeless products rose by nearly a full percentage point, to 55.9%.

Altria's wine business also did well. Revenue and operating company income gains came in around 9%, and the company said that higher volume helped offset rising costs so far in 2016, to keep the unit growing smoothly.

CEO Marty Barrington attributed Altria's success to a couple of factors. "Our core tobacco businesses delivered solid income growth on the strength of their leading premium brands," the CEO said, but "we also continued to simplify business processes, streamline infrastructure, and invest in important growth initiatives."

What's next for Altria?

In addition, Altria celebrated the completion of the merger between SABMiller and Anheuser-Busch InBev (BUD -0.17%). As Barrington put it: "With the completion of Anheuser-Busch InBev's business combination with SABMiller, we maximized the value of our SABMiller investment and expanded and extended our share repurchase program. Going forward, we continue to have a position in the global brewing profit pool as a significant shareholder in the new combined company."

Altria also reaffirmed its most recent guidance, which came immediately after the SABMiller deal was completed. The tobacco giant still expects adjusted earnings of between $2.98 and $3.04 per share for the full 2016 year, which works out to roughly a 6.5% to 8.5% growth rate over 2015.

Investors should keep two things in mind about the Anheuser-Busch relationship going forward. First, the company will have a sizable one-time gain that will be reported in the fourth quarter, which it estimates will amount to $4.55 per share. Second, because of the timing of how Anheuser-Busch reports results, Altria's earnings will incorporate its share of Anheuser-Busch earnings on a one-quarter lag going forward.

Altria stock didn't react strongly to the report, rising about 1% immediately following the announcement at the open, but giving up those gains over the course of the rest of the day. For the long run, though, Altria appears to be on track to continue its consistent performance going forward, and investors can look forward to seeing how the combination of its legacy tobacco business and the new stake in the beer giant fare.