Altria Group Inc., the largest seller of tobacco in the U.S., posted first-quarter profit that topped analysts’ estimates as low gas prices and higher wages helped smokers buy more expensive cigarettes.
Earnings rose to 72 cents a share, excluding some items, the Richmond, Virginia-based company said in a statement Thursday. Analysts estimated 68 cents, on average. Sales excluding excise taxes rose 6 percent to $4.53 billion, topping analysts’ $4.42 billion average projection.
Cheaper gasoline and rising wages for lower-income workers have led many smokers to trade up and purchase costlier brands over the past year. Altria has also raised prices on its traditional cigarettes, which include the Marlboro and Virginia Slims brands.
“It’s a continuation of what we talked about all last year: low gas prices,” said Kenneth Shea, a Bloomberg Intelligence analyst. “If excise taxes are not increased by the states by any significant level -- which we don’t see in this environment -- it could be a good year for tobacco.”
The shares rose 1 percent to $62.16 at 9:42 a.m. in New York. The stock had gained 5.7 percent this year through Wednesday.