Altria's Q2 Earnings on the Deck: How to Play the Stock

Core Viewpoint - Altria Group, Inc. is expected to report a decline in revenues for Q2 2025, while earnings are projected to show growth compared to the previous year [1][9]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for Q2 revenues is $5.2 billion, reflecting a 1.7% decrease from the same period last year [1]. - The consensus estimate for earnings per share (EPS) has increased to $1.37, indicating a 4.6% growth year-over-year [1][9]. Earnings Performance and Predictions - Altria has a trailing four-quarter average earnings surprise of 1.3%, with the last quarter's earnings exceeding the Zacks Consensus Estimate by 5.1% [2]. - The company currently has an Earnings ESP of +1.03% and a Zacks Rank of 3 (Hold), suggesting a potential earnings beat [4][3]. Factors Influencing Q2 Earnings - Regulatory pressures, particularly the ITC's exclusion order on NJOY ACE, have negatively impacted Altria's smoke-free product portfolio [5]. - The cigarette business is facing volume pressures due to consumer downtrading and competition from illicit flavored disposable vapes [5]. - Despite these challenges, Altria's strong pricing power and cost control measures are expected to support profitability [6][7]. Stock Performance - Over the past three months, Altria's stock has increased by 2.6%, slightly below the Zacks Tobacco industry's growth of 2.7% and significantly trailing the S&P 500's 15.5% rise [8]. - Altria's stock performance has outpaced Philip Morris International, which declined by 6.8%, but underperformed Turning Point Brands and British American Tobacco [8]. Valuation Analysis - Altria shares are trading at a forward 12-month price-to-earnings (P/E) ratio of 10.96, below the industry average of 14.48, indicating attractive value for investors [11]. - Compared to key competitors, Altria's P/E ratio is significantly lower than Philip Morris International (20.11) and Turning Point Brands (21.54), while being comparable to British American Tobacco (10.94) [13]. Investment Outlook - Altria faces a mixed backdrop with regulatory challenges and volume pressures, but resilient pricing power and disciplined cost control may provide stability [14]. - Investors may consider holding positions or selectively adding to their investments, while monitoring management's updates on product pipeline and strategic execution [14].