Altria Stock Trading at a Discount: What's the Next Best Move?

Core Insights - Altria Group, Inc. is currently trading at a significant discount compared to its industry peers and the broader market, presenting a potential value opportunity for long-term investors [1] - The stock's forward 12-month price-to-earnings (P/E) ratio is 11.76, which is below the Zacks Tobacco industry's average of 14.87 and the S&P 500's average of 23.39 [1][7] Valuation Comparison - Altria's relative undervaluation is highlighted when compared to competitors such as Philip Morris International Inc. (20.04X), Turning Point Brands, Inc. (28.25X), and British American Tobacco p.l.c. (11.59X) [3] Share Performance - Over the past three months, Altria's stock has increased by 8.9%, outperforming both the tobacco industry and the Consumer Staples sector, which declined by 1.6% and 2.7%, respectively [4] Earnings Performance - In Q2, Altria's adjusted EPS rose by 8.3% year-over-year to $1.44, driven by higher pricing, efficiencies, and share repurchases [7][9] - Revenues net of excise taxes remained stable at $5.29 billion, indicating the strength of Altria's diversified portfolio [9] Growth in Smoke-Free Segment - The on! nicotine pouch brand saw shipments surge by 26.5% in Q2, contributing to a 10.9% increase in adjusted operating income for the oral tobacco segment [10] - The brand's retail share in the oral tobacco market reached 8.7%, showcasing effective marketing and brand activation strategies [10] Smokeable Products Segment - Altria's smokeable products segment demonstrated resilience with a 4.2% increase in adjusted operating income in Q2, while Marlboro maintained a 59.5% share in the premium category [11] Challenges in Combustible Business - Domestic cigarette shipments fell by 10.2% in Q2, reflecting ongoing industry declines and increased competition from flavored disposable e-vapor products [12] Analyst Sentiment - The Zacks Consensus Estimate for EPS has seen upward revisions, with current year and next year estimates increasing by 2 cents each to $5.39 and $5.55, respectively [15] - This indicates improving sentiment among analysts, with projected year-over-year EPS growth of 5.3% this year and 2.9% next year [15]