Why Investors Are Nervous About Altria’s Future
The tobacco industry has been incredibly popular since its inception. It is a well-known fact that people all over the world make use of, and enjoy, the easy access that they have to tobacco in its various forms. Once seen as an exotic past-time signifying wealth or travel, smoking is now a habit that transcends class, economic and cultural boundaries.
In more recent years, links between smoking and life-threatening diseases such as lung cancer have caused significant controversy, and in countries across the world, smoking in public places has been banned, and could lead to prosecution.
Additionally, health warnings have appeared on cigarette packaging, some including graphic images of diseased body parts affected by smoking. So in the modern world, when more and more people are turning away from smoking in order to improve and preserve their health, how are leading tobacco companies such as Altria (MO) faring?
Currently, Altria’s stock is trading at around $33, with strong cash flow and a lower share price in comparison to other competing companies providing ‘sin’ goods. Price-to-earnings ratio presently stands at 19.81, slightly behind the than the 18.55 that Reynolds American (RAI) can offer at a higher price per share. Although one of Altria’s main brands, Marlboro, represents four of every 10 cigarettes bought and smoked in the US, Reynolds has an impressive stable of brands to offer. So, in a market which is seeing such widespread prosperity, will Altria be able to hold its own against its competitors? To continue reading, click here.