Altria Group is one of the largest tobacco companies in the United States with revenues of $20.7 billion in 2022 and $3.64 in dividend. The company’s strong brand and inelastic demand allowed it to raise prices in order to compensate for its 8% decline in sales. Altria stocks are trading 17% off their peak prices and could be interesting for value investors.
The company is a bright example of how to accept mistakes. Altria has acquired 45% of Cronos Group that has operations in the cannabis sector, but has recognised losses of $438 million in December 2022, and suspended any further investments in the company. The decision was made because the company was showing no signs of progress and no signs of generating revenues as the United States has not made the decision, on the Federal level, to legalise cannabis. There are also a lot of peers in the sector, like Constellation Brands, that have invested over $4 billion in Canopy Growth.
So, the decision of Altria’s management seems to be a wise and timely one as the company may return to this business at any moment, when the situation gets more favourable.
