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U.S. Tobacco Industry Analysis

UpdatedAug 18, 2022
DataAggregated Company Financials
Companies11
  • 7D-7.9%
  • 3M-18.3%
  • 1Y-55.1%
  • YTD-52.0%

Over the last 7 days, the Tobacco industry has dropped 7.9%, driven by a pullback from RLX Technology of 12%. Overall the industry is down 55% in 12 months. Looking forward, earnings are forecast to grow by 14% annually.

Industry Valuation and Performance

Has the U.S. Tobacco Industry valuation changed over the past few years?

DateMarket CapRevenueEarningsPEAbsolute PEPS
Fri, 19 Aug 2022US$4.5bUS$5.5bUS$440.3m7.9x10.2x0.8x
Sun, 17 Jul 2022US$5.1bUS$5.4bUS$483.8m8.1x10.5x0.9x
Tue, 14 Jun 2022US$5.7bUS$5.3bUS$372.5m8.6x15.3x1.1x
Thu, 12 May 2022US$5.1bUS$5.4bUS$222.2m9.6x23x0.9x
Sat, 09 Apr 2022US$5.4bUS$5.5bUS$245.9m10x22.1x1x
Mon, 07 Mar 2022US$6.0bUS$5.4bUS$134.1m12.8x44.8x1.1x
Wed, 02 Feb 2022US$7.1bUS$5.4bUS$158.4m13.4x44.8x1.3x
Fri, 31 Dec 2021US$8.3bUS$5.4bUS$158.0m13.9x52.6x1.5x
Sun, 28 Nov 2021US$10.0bUS$5.3bUS$6.3m13.1x1593.8x1.9x
Tue, 26 Oct 2021US$99.1bUS$26.3bUS$4.6b19.9x21.4x3.8x
Thu, 23 Sep 2021US$98.0bUS$26.3bUS$4.6b19.1x21.1x3.7x
Sat, 21 Aug 2021US$98.5bUS$26.3bUS$4.6b20x21.3x3.7x
Sat, 05 Jun 2021US$112.2bUS$25.4bUS$4.2b20.2x26.5x4.4x
Tue, 09 Mar 2021US$109.3bUS$25.3bUS$4.4b19.6x25.1x4.3x
Mon, 30 Nov 2020US$76.2bUS$24.3bUS$596.1m72.4x127.9x3.1x
Thu, 03 Sep 2020US$83.0bUS$22.7b-US$865,998,918.0038.5x-95.9x3.7x
Sun, 07 Jun 2020US$74.2bUS$22.8b-US$817,344,068.0027.5x-90.8x3.3x
Sat, 29 Feb 2020US$76.9bUS$22.1b-US$1,230,071,040.0025.6x-62.5x3.5x
Tue, 03 Dec 2019US$94.8bUS$22.3bUS$1.8b17.5x51.4x4.3x
Fri, 06 Sep 2019US$83.9bUS$22.2bUS$6.4b13.4x13.1x3.8x
Price to Earnings Ratio

13.1x


Total Market Cap: US$83.9bTotal Earnings: US$6.4bTotal Revenue: US$22.2bTotal Market Cap vs Earnings and Revenue0%0%0%
U.S. Tobacco Industry Price to Earnings3Y Average -22.4x202020212022
Current Industry PE
  • Investors are pessimistic on the American Tobacco industry, indicating that they anticipate long term growth rates will be lower than they have historically.
  • The industry is trading at a PE ratio of 10.2x which is higher than its 3-year average PE of -22.4x.
  • The 3-year average PS ratio of 3.0x is higher than the industry's current PS ratio of 0.82x.
Past Earnings Growth
  • The earnings for companies in the Tobacco industry have declined 59% per year over the last three years,
  • Revenues have also declined 37% per year.
  • This means overall sales from these companies are declining and profits are subsequently falling as well.

Industry Trends

Which industries have driven the changes within the U.S. Consumer Staples industry?

US Market1.35%
Consumer Staples3.51%
Tobacco-7.94%
Tobacco-7.94%
Industry PE
  • Investors are most optimistic about the Tobacco industry even though it's trading below its 3-year average PE ratio of 23.5x.
  • Analysts are expecting annual earnings growth of 14%, which is higher than its past year's earnings decline of 8.8% per year.
Forecasted Growth
  • Analysts are most optimistic on the Tobacco industry, expecting annual earnings growth of 14% over the next 5 years.
  • This is better than its past earnings decline of 8.8% per year.

    Top Stock Gainers and Losers

    Which companies have driven the market over the last 7 days?

    CompanyLast Price7D1YValuation
    PM Philip Morris InternationalUS$100.501.0%
    +US$1.6b
    -0.9%PE17.2x
    MO Altria GroupUS$45.611.1%
    +US$864.4m
    -5.5%PE47.2x
    UVV UniversalUS$52.900.7%
    +US$9.3m
    9.5%PE15x
    VGR Vector GroupUS$10.650.5%
    +US$7.7m
    -24.8%PE12.9x
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    Latest News

    Aug 14

    Altria: The Valuation Is Too Cheap For This High Margin Cash Cow

    Altria sold off recently as they wrote down their Juul investment. The company is trading under 10x earnings, well below the average multiple of 14.1x. Shares yield 8% and are due for another dividend hike this fall. They bought back 10.1M shares in Q2 and should continue to buy back shares as the valuation remains cheap. I try to read as many articles as I can on Seeking Alpha, because like you, I'm trying to find ways to protect and grow my wealth. While I appreciate different opinions, I try to build my own understanding of each business, so I know what I own, why I own it, and how much I think the stock is worth relative to where it is trading today. One of the companies that is well covered is Altria (MO), the tobacco giant and owner of the Marlboro brand here in the US. I have seen a couple of articles with the terminal decline thesis when it comes to Altria. While the recent Juul write-down was a part of those articles, they were more focused on the price hikes combined with declining volumes. My question is this: what is the value of a company with a wide moat priced under 10x earnings, with a yield over 8%, that also happens to be a dividend king? The argument that the tobacco industry is in secular decline complicates things, but I'm still in the camp that Altria is very undervalued and will likely hold up better than the broader market over the next 3 to 5 years. Investment Thesis Altria is a dividend king that is due for another hike this fall. They recently wrote off the Juul investment, which isn't ideal, but it wasn't contributing much to the bottom line anyway. I will be watching to see what management does in the coming years as volumes are projected to decline, but I'm hoping for a pivot into another industry outside of tobacco at some point. The valuation is very cheap at 9.4x earnings, as Altria is still a high-margin cash cow. They continue to buy back chunks of stock, which is very rewarding for long-term shareholders at these valuations. Investors can get paid 8% to wait for the share price to get closer to fair value, and I'm expecting double-digit returns for several years to come. Terminal Decline or A Future Business Pivot? I'm assuming that management will pivot at some point from tobacco, especially if the terminal decline with the main business becomes obvious. While Altria doesn't have a wide offering of so-called reduced risk products, that doesn't bother me. While I'm not a chemist or health expert, I am curious to see how the next two decades play out when it comes to vaping and heated tobacco products. I wouldn't be surprised if we find out that the chemicals that go into the newer products turn out to be worse than cigarettes. I prefer cigars myself, and I could be completely wrong on my cynical take on the reduced risk products, but I think people will still be smoking Marlboro Reds in 20 years. Ideally, that would mean Altria has hiked the dividend for the next 20 years to keep its streak alive, but that will be something I will keep an eye on down the road and check every couple of years. The other thing that I could see happening in the future is a pivot to another industry if the tobacco industry gets stuck in an irreversible decline. While the execution with outside investments has been poor, I think Altria could look to expand into an industry like alcohol or cannabis in the future. I think taking a stake in an American cannabis company would make more sense long term than the current Cronos (CRON) stake, but the regulatory environment is too complicated for now on US companies. That will be another thing to keep an eye on as a long-term shareholder. Valuation Altria's valuation is even cheaper than it was a couple of months ago, but it has started to rebound in recent weeks. Shares trade at 9.4x earnings, which is too cheap, even if we are looking at a secular decline. One peek at the financials shows a high-margin cash cow, despite the recent Juul write-off (which wasn't going to contribute much to the bottom line anyway). The current multiple is well below the average 14x multiple, and the likely multiple expansion should help investors easily clear double-digit returns. Price/Earnings (fastgraphs.com) Even if the multiple stays depressed, I still think the returns should be attractive. It also allows the company to buy back stock at better valuations. When you throw in an 8% yield, I like my chances of making money on Altria. Dividends and Buybacks The main draw in the investing community with Altria is the income. As a dividend king with an 8% yield, it checks off a couple of important boxes at first glance: a large current payout with a reliable history of annual increases. We are due for another raise this fall, and the company has also been returning capital to shareholders with buybacks. Shares Outstanding (fastgraphs.com)