Altria Group, Inc. (MO)

garrityb (56.45) Submitted: 1/31/07 2:46 PM : Start Price: $18.07 MO Score: 36.18

After listening to the conference call 1/31/07 and viewing Altria's - Kraft spinoff web page. I took a look at some basic numbers. currently Mo has a p/e of about 16 however BTI British American Tobacco and ITY International Tobacco Group both have p/e ratios of about 30. after the distribution of kraft according to the example given on Altria’s web site Mo shares will have a share price of about $63 per share given its current trade price. Given the forward looking earnings given during the call of between $4.15 / share and $4.20 / share and given that it was clear to me from the call that these are conservative estimates that even take in into account government regulations in Germany and Japan that may or may not go through if you take the conservative estimate of $4.15 per share then give it the multiple it deserves for a being a straight tobacco business (30) that gives you a price target of $124.50 if this is a truly conservative estimate and earnings are greater than the $4.20 per share then you could have a $130 stock, however lets take a conservative look and a use a 20 multiple and you get $83. Conclusion this stock is cheap. chances of getting a 30+% gain after the distribution look good just for MO so if you buy the stock before the split you basically get a KFT as a bonus.

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