ZACKS·2025-12-23 16:35Core Insights - Altria Group, Inc. and Philip Morris International Inc. are major players in the global tobacco industry, each with unique geographic exposure and strategic focuses [1][2] - Altria has a market capitalization of approximately $98.5 billion, primarily focused on the U.S. market, while Philip Morris has a larger market cap of about $248.6 billion, reflecting its international presence and innovation in reduced-risk products [1][2] Altria's Position - Altria maintains a strong position in the U.S. tobacco market, with a 64.4% adjusted operating companies income margin in Q3 2025, indicating strong pricing power despite declining cigarette volumes [3][6] - The company is investing in smoke-free products, with on! nicotine pouch shipments reaching 133.6 million cans year-to-date, and continues to innovate with products like on! PLUS and Horizon's Ploom [4][8] - Altria increased its quarterly dividend by 3.9% to $1.06 per share in August 2025, marking its 60th dividend increase in 56 years, and expanded its share-repurchase authorization to $2 billion through 2026 [5] - Domestic cigarette shipment volumes declined by 8.2% in Q3, and Marlboro's market share decreased by 1.2 percentage points to 40.4%, highlighting ongoing challenges [6] Philip Morris' Growth - Philip Morris is increasingly focused on smoke-free products, which accounted for 41% of total net revenues and 42% of gross profit in Q3 2025, with shipments growing by 16.6% year-over-year [7][9] - Key smoke-free brands like IQOS, ZYN, and VEEV are driving revenue growth, with IQOS leading in heated tobacco globally [9] - Operational discipline and cost controls have supported margin expansion and earnings growth, while the combustible segment remains under pressure with a 3.2% decline in cigarette shipment volumes [10][11] Earnings Estimates - The Zacks Consensus Estimate for Altria's EPS indicates a year-over-year increase of approximately 6.3% for 2025 and 2.3% for 2026, remaining unchanged at $5.44 and $5.56 respectively [12] - For Philip Morris, the consensus estimate implies year-over-year growth of 14.2% for 2025 and 11.3% for 2026, with estimates slightly down to $7.50 and $8.35 [14] Stock Performance and Valuation - Over the past year, Altria's shares have increased by 17.4%, while Philip Morris has seen a stronger gain of 33.9% [15] - Altria's forward P/E ratio is 10.54, below its one-year median of 10.80, while Philip Morris' forward P/E ratio stands at 19.17, also below its median of 20.59 [16] Investment Appeal - Philip Morris offers stronger global growth and leadership in reduced-risk products, while Altria provides a compelling value proposition with higher income visibility and resilient margins [17] - Altria is viewed as a better option for income-focused investors seeking stability and consistent returns amid the industry's transition to smoke-free products [17]