On Thursday the directors of Altria Group (MO, Financial) filed with the U.S. Securities and Exchange Commission a statement of ownership concerning shares of their own company.
Federal securities filings show that on Dec. 31, insiders of the company acquired shares of their own company according to the deferred fee plan for directors who are not employees of the company. The purchase was made at an average market price of $48.995 per share.
The topic is of interest to investors as it may indicate how the share price will move on the stock market soon.
The table summarizes the number of shares acquired and holdings of each director following the transaction.
| Name of the director | Position of each director in the company | Number of shares acquired | Share equivalents held in the deferred fee plan for directors who are not employees of Altria Group (direct ownership) | Number of shares that are beneficially owned by each director (direct ownership) |
| Thomas F. Farrell II | Presiding Director and a member of the committees for the Compensation, Executive and Nominating, and for Corporate Governance and Social Responsibility | 281 | 31,112 | 74,810 |
| Kelly-Ennis, Debra | Member of the committees for Audit, Innovation and Nominating, and for Corporate Governance and Social Responsibility | 561 | 15,218 | 23,378 |
| Newman Mark | Member of the committees for Audit and Finance | 281 | 999 | 9,265 |
Altria Group closed at $49.04 per share on the New York Stock Exchange on Thursday, down 0.55% from the previous close, but slightly above the average purchase price of the insiders’ acquisition of shares of the U.S. tobacco giant.
The share price is down 30% for the 52 weeks through Jan. 2 and is cheap according to several indicators, signalling that the market may be creating a convenient entry point into this cash flow investors may milk for dividends.
The company is distributing 8 cents in cash quarterly dividends per share for a forward dividend yield of 6.49% versus an industry median of 5% and the S&P 500 index’s dividend yield of 2.14% as of Jan. 3. Shareholders will receive the next quarterly dividend on Jan. 10, but only those who were on the company’s record not later than Dec. 26 will benefit. Investors who may decide today to become shareholders of Altria Group will start receiving the dividend around April 10.
Will Altria Group continue the payments? Thanks to the sale of Marlboro cigarettes in the U.S., the tobacco giant makes more than $5.5 billion levered free cash flow every 12 months of operations, not to mention its cash and short-term securities of $2.4 billion as of the third quarter of 2018.
In addition, the company is a loyal dividend payer that has not once missed a distribution since 1970.
Let’s have a look at the market valuation.
The share price is below the 50-, 100- and 200-day simple moving average lines, only 5.4% above the 52-week low of $46.49 and 46.7% below the 52-week high of $71.86.
The 14-day Relative Strength Indicator of 34.3 indicates that the stock may have reached oversold levels and its share price could start rising again soon.
The price-earnings ratio is 8.75 versus an industry median of 17.38 and the forward price-earnings ratio is 11.3 compared to an industry median of 17.48.
Further, the stock may trade cheaply also because the share price is below the Peter Lynch earnings line (P/E = 15).
Disclosure: I have no positions in any security mentioned.
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