Devin- To what extent does it bother you that during last quarter's earnings presentation Altria's management always seemed to reference the long term but yet presented data that only compared YOY and left other important bits of information out altogether. I guess best case scenario it was an honest mistake b/c they didn't think any other data was necessary but worst case is that it was left out intentionally which to me is being somewhat deceitful and subsequently a huge red flag for me as an investor.
I also want to congratulate you on a very well researched and thoroughly enjoyable post!
Having said that, I'm more concerned than you are about Altria's volume declines for two reasons:
1. According to Altria, the macro economic environment is contributing to a 4 percent annual decline in industry volumes. However, the economy is actually doing pretty well -- the unemployment rate is at 3.5% and, using the Atlanta Fed wage growth tracker, wage growth is positive in real terms. I'm afraid the macro economic contribution will be much worse than 4% if we enter a recession.
2. I'll read Herb Greenberg's post about the pushback to CPG's price hikes. But my impression is that most CPGs have managed to increase their price/mix by 10-15% yoy while on average suffering minimal volume declines: https://twitter.com/TheTranscript_/status/1651993602116005906. I agree that historically the nicotine industry has had much lower elasticity than the CPG space, but is that really the case right now?
Devin, you are far an away the best Altria analyst. I regularly forward these to my CIO in lieu of sell-side reports.
Thanks. Your pieces are addictively informative.
Solid work man.
Great work as always, Devin. Thank you!
Devin- To what extent does it bother you that during last quarter's earnings presentation Altria's management always seemed to reference the long term but yet presented data that only compared YOY and left other important bits of information out altogether. I guess best case scenario it was an honest mistake b/c they didn't think any other data was necessary but worst case is that it was left out intentionally which to me is being somewhat deceitful and subsequently a huge red flag for me as an investor.
Would appreciate your thoughts. Thanks!
I also want to congratulate you on a very well researched and thoroughly enjoyable post!
Having said that, I'm more concerned than you are about Altria's volume declines for two reasons:
1. According to Altria, the macro economic environment is contributing to a 4 percent annual decline in industry volumes. However, the economy is actually doing pretty well -- the unemployment rate is at 3.5% and, using the Atlanta Fed wage growth tracker, wage growth is positive in real terms. I'm afraid the macro economic contribution will be much worse than 4% if we enter a recession.
2. I'll read Herb Greenberg's post about the pushback to CPG's price hikes. But my impression is that most CPGs have managed to increase their price/mix by 10-15% yoy while on average suffering minimal volume declines: https://twitter.com/TheTranscript_/status/1651993602116005906. I agree that historically the nicotine industry has had much lower elasticity than the CPG space, but is that really the case right now?
Maybe I'm too gloomy?