ZACKS·2025-11-27 16:11Core Insights - Altria Group, Inc. and Philip Morris International Inc. are key players in the global tobacco industry, each with distinct strategies and strong brand portfolios [1][2] - The tobacco industry is transforming due to declining cigarette use, regulatory pressures, and consumer interest in smoke-free technologies, prompting both companies to innovate and restructure [2] Altria Group, Inc. (MO) - Altria holds a dominant position in the U.S. tobacco market with a 45.4% cigarette retail share and Marlboro's 59.6% share in the premium segment as of Q3 2025 [3] - The smokeable segment achieved a 64.4% adjusted operating companies income margin, indicating strong pricing power despite volume pressures [3] - Altria's strategy includes enhancing profitability while expanding into oral nicotine, heated tobacco, and e-vapor platforms, with on! shipments reaching 133.6 million cans year-to-date [4] - The company raised its quarterly dividend by 3.9% to $1.06 per share, marking its 60th increase in 56 years, and expanded its share repurchase program to $2 billion through 2026 [5] - Domestic cigarette shipment volumes fell 8.2% in the quarter, and Marlboro's total-category share declined to 40.4%, highlighting ongoing challenges [6] Philip Morris International Inc. (PM) - Philip Morris is focused on smoke-free products, which accounted for 41% of total net revenues and 42% of gross profit in Q3 2025, with smoke-free gross profit reaching a record $3.1 billion [7][8] - Shipments of IQOS increased by 15.5% to 40.8 billion units, maintaining a 76% global share of heated tobacco units [8] - Adjusted operating income rose 12.4% to $4.7 billion, with margins expanding to 43.1%, and adjusted EPS increased 17.3% to $2.24 [10] - Despite a 3.2% decline in cigarette shipment volumes, pricing strength lifted net revenues by 4.3% [11] Earnings Estimates - The Zacks Consensus Estimate for Altria's 2025 EPS indicates a year-over-year increase of around 6.3%, with the 2025 EPS estimate at $5.44 [12] - For Philip Morris, the 2025 EPS estimate implies a year-over-year growth of 14.3%, with the estimate at $7.51 [14] Stock Performance - Over the past year, Altria's shares gained 9.3%, while Philip Morris's shares advanced by 22.7% [16] - Altria trades at a forward P/E ratio of 10.57, while Philip Morris's forward P/E ratio stands at 18.9 [18] Investment Outlook - Philip Morris is viewed as the stronger growth story due to its shift towards smoke-free products and disciplined cost strategy, while Altria offers stability and consistent cash flows [20]