Last update on 2024-06-07

Altria Group (MO) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Analyze Altria Group (MO) using Piotroski F-Score for fiscal year 2023 with a strong score of 8/9, evaluating financial health based on profitability, liquidity, and leverage.

Short Analysis - Piotroski Score: 8

We're running Altria Group (MO) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a tool to judge the financial strength of a company, scoring from 0 to 9 based on 9 criteria focused on profitability, liquidity, and operating efficiency. Altria Group (MO) has been evaluated using this system and scored an 8, indicating a strong financial position. Major highlights include a positive net income of $8.13 billion, strong cash flow from operations at $9.287 billion, and efficient leverage management. Nevertheless, one area of concern is the weaker Current Ratio, indicating potential short-term liquidity challenges.

Insights for Value Investors Seeking Stable Income

Given the high Piotroski F-Score of 8, Altria Group (MO) appears to be a financially strong and potentially undervalued stock. Its consistent profitability, good cash flow, and sound financial management make it attractive for long-term investors. However, the lowering Current Ratio requires attention, suggesting that investors should monitor the company's ability to cover its short-term obligations. Overall, it is worth looking into this stock as part of a diversified investment portfolio.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Altria Group (MO)

Company has a positive net income?

Net income is positive if the company’s earnings after taxes and expenses are greater than zero. It shows overall profitability.

The net income of Altria Group (MO) in 2023 is $8.13 billion, which is indeed positive. This results in adding 1 point according to the Piotroski score criterion. Over the last 20 years, Altria's net income has shown considerable volatility, with significant gains and periods of reduced profitability. For instance, a notable increase of $14.24 billion was achieved in 2016 due to one-time events such as the SABMiller acquisition, while 2019 saw a major dip with a net loss of $1.29 billion. However, Altria's recovery with $8.13 billion in 2023 is a positive sign, demonstrating its capacity to generate profits despite historical fluctuations and economic challenges.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents the total amount of cash generated by a company's core business operations. Positive cash flow indicates that a company can generate enough revenue to maintain and grow its operations.

For the fiscal year 2023, Altria Group (MO) reported a Cash Flow from Operations (CFO) of $9,287,000,000, which is positive, thereby adding 1 point according to the Piotroski F-Score methodology. Historically, from 2003 to 2023, Altria Group has consistently maintained positive cash flows, showing a strong capacity for revenue generation through its core business activities. For example, in 2007, CFO was significantly high at $13,586,000,000 and even during financial downturns like in 2008, 2009, and 2010, the company still maintained positive cash flows. By 2023, with $9,287,000,000 in operating cash flow, Altria demonstrates consistent cash generation capability, underscoring its financial robustness and stability, making this a favorable trend.

Return on Assets (ROA) are growing?

Explain the criterion for Altria Group (MO) and why it is important to consider

The Return on Assets (ROA) is a profitability ratio reflecting the efficiency with which a company uses its assets to generate profit. It is a vital indicator for investors to assess the financial health and performance of the company.

Operating Cashflow are higher than Netincome?

This criterion checks if a company’s operating cash flow exceeds its net income.

For Altria Group (MO) in 2023, the operating cash flow is $9,287,000,000, while the net income is $8,130,000,000. Since the operating cash flow is higher than the net income, this indicates positive operational efficiency and good cash generation relative to profits. This trend is favorable, earning 1 point for this criterion.

Liquidity of Altria Group (MO)

Leverage is declining?

Leverage evaluates the proportion of a company's debt to its equity, essential in understanding financial risk and capital structure.

Comparing Altria Group's leverage of 0.6799 in 2022 to 0.6511 in 2023, we observe a decrease, adding 1 point. This trend is positive, indicating improved financial stability. Historically, Altria's leverage fluctuated, peaking at 0.6816 in 2021. The current decrease reflects better debt management amid recent challenges in the tobacco industry.

Current Ratio is growing?

The Current Ratio compares a company's current assets to its current liabilities, providing insight into its capability to cover short-term obligations. A higher ratio is generally more favorable as it indicates better liquidity.

Upon comparing Altria Group's (MO) Current Ratio of 0.4934 in 2023 with 0.838 in 2022, it is discernible that the Current Ratio has decreased. This trend suggests that the company's liquidity position has weakened over the past year, making it potentially more challenging to meet short-term liabilities. Over the last 20 years, Altria's Current Ratio has generally remained low compared to the industry median, which significantly surpassed Altria's ratio particularly in recent years (2.8035 in 2022 compared to Altria’s 0.838). This persistent underperformance relative to the industry median might raise concerns about the company's short-term financial health.

Number of shares not diluted?

Change in shares outstanding indicates whether a company is buying back shares or issuing more. A decrease in shares suggests a focus on providing value to existing shareholders.

The outstanding shares of Altria Group (MO) decreased from 1,785,534,122 in 2022 to 1,763,461,775 in 2023. This trend is positive for the criteria as it indicates that the company is likely buying back shares, which is often seen as a move to return value to shareholders. This action adds 1 point based on the Piotroski criteria. Historically, Altria has shown a consistent tendency to buy back shares, as evidenced by the steady decrease over the last 20 years from about 2.036 billion shares in 2003 to the present figures. This suggests a long-term strategy focused on enhancing shareholder value.

Operating of Altria Group (MO)

Cross Margin is growing?

Change in Gross Margin compares the company’s gross margin from the recent year to the previous year. An increase suggests improved efficiency in production or pricing.

In 2023, Altria Group's gross margin stood at 0.6967, showing an improvement from 0.6886 in 2022. This represents a meaningful increase of approximately 0.81%. Historically, the gross margin has demonstrated a trend of growth, reflecting sustained operational efficiency improvements over the last two decades; starting from 0.475 in 2003, the gross margin has generally inclined, peaking in recent years. Additionally, when compared to the industry median of 0.4018 in 2023, Altria significantly outperforms its peers. The increase in gross margin adds 1 point to the company's Piotroski F-Score, signifying a favorable trend in cost management and profitability enhancement.

Asset Turnover Ratio is growing?

Asset turnover measures a firm's efficiency in using its assets to generate sales, reflecting operational performance.

The asset turnover for Altria Group (MO) increased from 0.541 in 2022 to 0.5429 in 2023. While this is a marginal increase, it shows an improvement in the efficiency with which the company utilizes its assets to generate revenue. This slight uptick is significant within the context of Altria's historical trends in asset turnover over the past 20 years, which have shown fluctuations, with some years experiencing more dramatic swings. A stable or improving asset turnover ratio, even if modest, is a good sign for investors as it indicates better asset management and operational efficiency. Thus for this criterion, Altria is awarded 1 point.