Solid Earnings per share numbers mask a serious problem

Why own any stock unless it pays dividends. While the S & P 500 and the tracking ETFs, SPY (SPY), brought together more than 20% of year lows last year, and stocks like Apple (AAPL) are more than 30% this year, several sectors have shares were better than a stock dividend for last year. Over the past few years’ stocks of tobacco has consistently been one of the most effective and popular dividend shares on the market. The largest and most popular tobacco stocks Altria (MO). Altria reaches almost 50% last year, and this company is consistently one of the most efficient stock market in general, the past few years. That's why I thought the last receipt of the company was so interesting. I have repeatedly recommended that tobacco stocks over the past year, including recommended investing in Lorillard (LO) in the seventies in my first article about the search for alpha more than a year ago. Altria traded today in the back of 21x earnings and nearly 15 times average earnings estimates for these years. However, while the cash flow of Altria remains strong, the company was virtually no growth in the past year, and companies with more than 80% of its net profits to pay dividends and repurchase shares. That's why I question the last updates in a statement. Altria recently reported 1.5% decline compared to the year of delivery, taking into account the impact of trade on the stock, and the company reported earnings per share growth of about 7-8%. Management is guided by the probability of earnings per share of $ 2.19, $ 2.23 in 2012, and analysts expected. In addition, the company announced a new $ 400 million a year savings program and disclosed that management purchased approximately $ 66 million in shares at a price of about $ 32.40 per share in the first quarter. While Altria top and bottom line numbers were quite solid, I think, a deeper analysis of the recent volume and price trends are alarming for this industry leader. The minimum annual drop in Altria in total shipments of cigarettes, of course, hard, until now the performance of premium brands like Marlboro was poor. Although the Marlboro brand market share in 0,2%, Marlboro delivery fell nearly 1%, net income from the delivery of Marlboro fell, and premium brands of cigarettes have seen about 9% decrease in volumes. Altria to stabilize the shipment numbers have been largely achieved with a company that provides significant discounts and the company increased discount brands on the market. Altria reported that the company's core brand at a discount, L & M, saw 24% growth last quarter. In conclusion, while the acquisition of UST by Altria and the situation of SAB Miller, as well as companies of Saint-Michel franchise wine and John Middleton brand, give this company some of the key outputs of cigarette revenue department. However, Altria gets more than 80% of total revenue from cigarettes, and companies are increasingly forced to use cheaper brands of cigarettes to compensate for the loss of market share from the competition with discount cigarettes, offered by competitors, Lorillard (LO) and Reynolds (RAI). The operating margin for Altria in almost 42% was very strong in the last quarter. Nevertheless, the company is debt to equity ratio of more than 350%, and using the balance control to inflate the likelihood of long-term return on equity of the company. Altria only about 6x coverage rate of interest payments, and the company's debt is trading at 5-7%. If the interest rate will increase slightly, and the company continues to sell to get more discount brands, the growth of the industry leaders and the region may face significant pressure. Disclosure: I have no positions in any stocks mentioned, and does not intend to initiate any positions within the next 72 hours.