Altria Stock Trading Cheaper Than Industry: What's the Next Best Move?

Core Insights - Altria Group, Inc. (MO) is currently undervalued with a forward 12-month P/E ratio of 9.85, which is a 16.9% discount compared to the Zacks Tobacco industry's average of 11.85 [1] - The stock has shown strong performance over the past year, rising by 30.8%, outperforming the industry average of 28% and the S&P 500's increase of 27.3% [3] - Altria is focusing on a smoke-free future, with significant growth in its NJOY e-vapor brand and oral nicotine pouch brand, on!, which saw a 46% increase in shipment volume [10][12] Valuation and Market Position - Altria's stock closed at $52.60, which is 9.4% below its 52-week peak of $58.04 [3] - The stock is trading above its 100-day and 200-day moving averages, indicating a bullish trend [13] - Despite the lower valuation, there are market concerns regarding Altria's growth prospects, which may reflect skepticism about its ability to meet market expectations [4] Growth Strategies and Challenges - Altria is implementing the "Optimize and Accelerate" initiative, targeting at least $600 million in cost savings over the next five years [10] - The company faces challenges from the rise of illicit flavored disposable e-vapor products, which have increased by 45% in users over the past year, impacting the growth of NJOY [15] - Domestic cigarette volumes saw an adjusted decline of 11.5% in the fiscal third quarter, exceeding the industry's average decline of 9% [15] Strategic Partnerships and Future Outlook - Altria is diversifying its portfolio through strategic partnerships, including a joint venture with Japan Tobacco to develop the Ploom heated tobacco device [16] - Analysts are optimistic about Altria's earnings prospects, with the Zacks Consensus Estimate for fiscal 2024 EPS rising to $4.12, indicating a year-over-year growth of 3.4% [17] - The consensus for fiscal 2025 EPS has also increased from $5.30 to $5.33, suggesting a jump of 4.1% from the previous year [17]