MO vs. PM: The Ultimate Face-Off in a Changing Tobacco Landscape

Core Insights - Altria Group, Inc. and Philip Morris International Inc. are navigating a transforming tobacco market with distinct strategies, focusing on smoke-free alternatives and maintaining strong brand presence [1][2] Altria Group, Inc. - Altria's pricing power is a key factor in its financial resilience, with a 10% net price realization in smokeable products leading to a 4.2% increase in adjusted operating companies income (OCI) in Q2 2025 [6] - The oral tobacco segment, particularly the on! nicotine pouch brand, saw shipments rise 26.5% year over year, contributing to a 10.9% increase in adjusted OCI [7] - Adjusted earnings per share (EPS) increased 8.3% year over year to $1.44 in Q2 2025, with revenues net of excise taxes at $5.29 billion [8] - Marlboro maintains a 59.5% share in the premium category, showcasing Altria's strong market position and ability to adapt to a smoke-free future [10] Philip Morris International Inc. - Philip Morris's growth is driven by smoke-free products, which accounted for 41% of total net revenues and 42% of gross profit in Q3 2025 [11] - Shipments of IQOS, ZYN, and VEEV showed significant growth, with IQOS shipments up 15.5% to 41 billion units, maintaining a 76% global share in heated tobacco [12] - Adjusted operating income rose 12.4% to $4.7 billion, with adjusted EPS increasing 17.3% to $2.24, supported by strong performance in smoke-free products [13] - Despite a 3.2% decline in cigarette shipment volumes, Philip Morris managed a 4.3% increase in net revenues through pricing strategies [14] Market Performance - Altria's stock has gained 25.3% over the past year, outperforming Philip Morris's 13.1% increase and the broader S&P 500's 20.6% rise [21] - Altria is trading at a forward P/E ratio of 11.41, while Philip Morris's forward P/E ratio stands at 18.24 [20] Investment Outlook - Altria is positioned as a better investment for income-focused investors due to its attractive valuation, robust pricing power, and growing smoke-free momentum, while Philip Morris offers stronger global growth potential [22]