Core Insights - British American Tobacco (NYSE: BTI) is the second-largest tobacco company by market capitalization, valued at $105 billion [1] Company Overview - The company is undergoing a transformation towards "reduced risk" products, which is a significant aspect of its business strategy [1] Investment Perspective - The article reflects a positive outlook on the company's potential, indicating a long-term beneficial position in BTI shares [2]

Company Overview - British American Tobacco (NYSE: BTI) is one of the largest tobacco companies globally, operating in over 180 countries [1] Business Diversification - The company is transitioning from a traditional combustible cigarette business to diversifying its revenue streams into next-generation products [1]

Core Insights - Philip Morris International Inc. is transitioning towards becoming a 100% smoke-free products company, with smoke-free products currently accounting for 42% of its overall revenue as of March 31, 2025 [2]. Group 1: Company Overview - Philip Morris International Inc. is a US-based multinational tobacco company that produces cigarettes and a variety of smoke-free products, including e-vapor, heated tobacco, and oral smokeless products [2]. - The company is focusing on developing and commercializing oral and inhaled consumer health and wellness products, as well as inhaled prescription products for cardiovascular emergencies and pain management [3]. Group 2: Technology and Innovation - The report provides insights into Philip Morris' tech activities, including digital transformation strategies, innovation programs, and technology initiatives [1][4]. - Key technology initiatives include partnerships and product launches, with a focus on technology themes, objectives, and benefits [6]. - The company has established a venture arm, PM Equity Partner, to support its technology initiatives [6]. Group 3: Financial Insights - The report includes details of estimated ICT budgets and contracts, providing insights into Philip Morris' tech operations and strategies [6].

Core Insights - Philip Morris International is transitioning from a traditional cigarette manufacturer to a more diverse brand focusing on smoke-free products, particularly the Zyn oral nicotine pouch [2][8] - The company has shown steady earnings growth, with EPS increasing by 14%, 14%, and 13% year-over-year over the past three quarters [3] - Philip Morris has consistently outperformed Wall Street expectations, beating analyst estimates in 19 of the last 20 quarters [6] Company Overview - Philip Morris International operates in over 180 countries and was spun off from the Altria Group in 2008 [1] - The company is known for its premium cigarette brands, including Marlboro, Parliament, and Virginia Slim [1] Smoke-Free Business Growth - Zyn has captured approximately 75% of the tobacco pouch market, driven by its popularity on social media and appeal to younger consumers [2] - Shipments of Zyn have increased more than fivefold over the past five years, with continued growth anticipated [2] Financial Performance - Philip Morris has demonstrated consistent annual earnings growth over the past three years [3] - The company has a low cost structure and a healthy cash reserve, supporting future growth [7] Stock Performance - The stock has a beta of 0.14, indicating lower volatility compared to the S&P 500, while outperforming over 95% of S&P 500 stocks [4] - Consensus estimates suggest double-digit EPS growth into 2026, indicating positive future performance for shareholders [7]

Core Insights - Philip Morris International Inc. (PM) is accelerating its transition from traditional tobacco to reduced-risk products, with smoke-free products accounting for 44% of total gross profit in Q1 2025, indicating significant progress towards becoming substantially smoke-free [1][8] Group 1: Product Performance - IQOS, PM's heat-not-burn device, achieved 9.4% growth in HTU-adjusted IMS, driven by strong performances in Japan and Europe [2] - ZYN, the oral nicotine pouch acquired from Swedish Match, saw shipments increase by 53% year-over-year to 202 million cans, with PM raising its 2025 shipment forecast to 800-840 million cans [2][8] Group 2: Financial Metrics - Smoke-free organic revenues increased by 20.4%, while gross profit rose by 33.1%, resulting in a gross margin exceeding 70%, significantly higher than combustible products [3][8] - PM's shares have increased by 52.3% year-to-date, outperforming the industry growth of 37% [7] Group 3: Competitive Landscape - Altria is expanding its smoke-free portfolio, with on! nicotine pouch shipments rising 18% year-over-year, contributing to $654 million in net revenues for its Oral Tobacco segment [5] - British American Tobacco aims for 50 million users of smoke-free products by 2030 and plans to derive 50% of revenues from this segment by 2035, with its New Category segment growing by 2.5% in 2024 [6] Group 4: Future Outlook - PM is well-positioned for future growth with strategic manufacturing investments in the U.S. and a multi-category strategy that includes e-vapor products [4] - The Zacks Consensus Estimate for PM's 2025 earnings suggests a year-over-year growth of 13.7%, with 2026 earnings expected to increase by 11.7% [12]

Core Insights - Altria Group, Inc. is experiencing significant challenges in its smokeable products segment, with a notable decline in cigarette volumes and revenues [1][8] - The overall tobacco industry is facing economic pressures, leading to a shift towards discount brands and an increase in illicit e-vapor products [2][3] Company Performance - In Q1 2025, Altria's domestic cigarette shipment volumes decreased by 13.7%, while net revenues from the smokeable segment fell by 5.8% year over year to $4.62 billion [1][8] - The company's total revenues dropped by 5.7% in the same quarter, reflecting the impact of economic strain on consumers [2] Market Dynamics - Inflation and stagnant wage growth are pushing low-income smokers towards cheaper alternatives, resulting in a 1.8 share point gain for the discount cigarette segment [2] - Altria's flagship Marlboro brand experienced a 1-point decline in retail share year over year [2] Competitive Landscape - The illegal disposable e-vapor market is estimated to dominate over 60% of the e-vapor market, further impacting traditional cigarette demand [3] - Competitors like Philip Morris International and British American Tobacco are also facing structural pressures in their combustible segments, with both companies pivoting towards reduced-risk products (RRPs) [5][6] Strategic Response - Altria may need to accelerate its transition to smoke-free alternatives to sustain growth and investor confidence, as evidenced by its investments in platforms like NJOY and on! [4] - The company’s current valuation shows a forward price-to-earnings ratio of 10.73X, below the industry average of 15.47X, indicating potential undervaluation [10] Earnings Estimates - The Zacks Consensus Estimate for Altria's 2025 earnings implies a year-over-year growth of 5.3%, with a 3% uptick expected in 2026 [12]

Core Viewpoint - Altria Group is gaining attention from institutional investors despite its association with tobacco products, as it offers stability and high dividend yields in a volatile market [2][3][15]. Group 1: Institutional Interest - A major institutional player acquired $1.3 billion worth of Altria Group shares, indicating significant interest from large investors [4]. - The stock is trading within 5% of a new 52-week high, suggesting bullish momentum and investor confidence [6]. Group 2: Financial Performance - Altria Group has a gross profit margin of 70.8%, showcasing its pricing power and market share [8][9]. - The company maintains a net income margin of 50.4%, allowing for efficient capital allocation [10]. - Altria generates an average return on invested capital (ROIC) of 40% annually, enabling reinvestment in growth and shareholder benefits [11]. Group 3: Dividend and Income Potential - The company offers a dividend yield of 6.9%, with an annual dividend payment of $4.08 per share, appealing to income-focused investors [13][14]. - Altria has a strong track record of dividend increases over 56 years, reinforcing its reliability as an income-generating asset [14][15].

Market Overview - U.S. stock markets are experiencing a positive trend after recent volatility, with the S&P 500 near its all-time high and both the Nasdaq Composite and Dow showing positive year-to-date performance [1][2] Economic Factors - Ongoing trade negotiations between the U.S. and China, stability in the U.S. labor market, and a declining inflation rate have improved market sentiment towards equities [2] Investment Opportunities - Non-tech stocks have shown significant appreciation year to date, alongside discussions of AI, quantum computing, and 5G/6G technologies [3] Recommended Stocks - Five corporate giants with market capitalizations over $50 billion have provided returns exceeding 40% year to date, all holding a Zacks Rank 1 (Strong Buy) [4][5] Howmet Aerospace Inc. (HWM) - Benefits from strong momentum in the commercial aerospace market and defense aerospace business, supported by rising U.S. and international defense budgets [8] - Expected revenue and earnings growth rates of 8.5% and 28.6% respectively for the current year, with a 4.2% improvement in earnings estimates over the last 30 days [9][10] Newmont Corp. (NEM) - Progressing with growth projects, including the Tanami expansion and the acquisition of Newcrest, which enhances operational synergies [11] - Expected revenue and earnings growth rates of 2% and 20.1% respectively for the current year, with a 9.7% improvement in earnings estimates over the last 30 days [12] Philip Morris International Inc. (PM) - Strong pricing power and an expanding smoke-free product portfolio, with products like IQOS and ZYN driving growth [13] - Expected revenue and earnings growth rates of 8.1% and 13.7% respectively for the current year, with a 4.6% improvement in earnings estimates over the last 60 days [15] NatWest Group plc (NWG) - Provides a range of banking and financial services, with expected revenue and earnings growth rates of 20.1% and 17.3% respectively for the current year, and a 6.8% improvement in earnings estimates over the last 30 days [16][17] Deutsche Bank Aktiengesellschaft (DB) - First-quarter 2025 results benefited from increased revenues and lower expenses, with a focus on stable, capital-light businesses driving revenue growth [18][19] - Expected revenue and earnings growth rates of 12% and over 100% respectively for the current year, with a 4.2% improvement in earnings estimates over the last 60 days [19]

Core Viewpoint - British American Tobacco (BTI) has been upgraded to a Zacks Rank 2 (Buy), indicating an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of changing earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for British American Tobacco suggest an improvement in the company's underlying business, which could lead to higher stock prices [5][10]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7][9]. - The upgrade of British American Tobacco to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions - British American Tobacco is projected to earn $4.54 per share for the fiscal year ending December 2025, reflecting a year-over-year change of -1.9% [8]. - Over the past three months, the Zacks Consensus Estimate for British American Tobacco has increased by 1%, indicating a positive trend in earnings estimates [8].

Core Viewpoint - Altria Group, the largest cigarette maker in North America, is facing significant challenges due to declining cigarette volumes, despite rising earnings and dividends, raising concerns for investors [1][9]. Company Overview - Altria primarily focuses on cigarette production, with 14.2 billion cigarettes produced in Q1 2025, accounting for approximately 97% of its smokable products [3]. - Smokable products contribute around 88% to Altria's revenue, highlighting the importance of cigarettes to its business model [3]. Industry Trends - Cigarette volumes are declining, with a 13.7% decrease in production from nearly 16.5 billion in Q1 2024 to 14.2 billion in Q1 2025 [4]. - Historical data shows a significant drop from over 25 billion cigarettes produced in Q1 2020, indicating ongoing industry headwinds [4]. Company Strategies - Altria has attempted to mitigate the impact of declining cigarette demand through price increases, leveraging the addictive nature of nicotine to maintain some pricing power [5]. - However, recent trends suggest that price increases alone are insufficient to sustain revenue growth [6]. Financial Performance - Despite a year-over-year revenue decline of 5.7% in Q1 2025, generating approximately $5.3 billion compared to nearly $6.4 billion in 2020, Altria has managed to keep earnings and dividends rising [9]. - The company has reduced its share count from 1.758 billion in Q1 2024 to 1.69 billion in Q1 2025, primarily through stock buybacks, which has helped support earnings [7][10]. Future Outlook - While Altria currently offers a 6.7% dividend yield, the company must find alternatives to cigarettes to avoid a potential terminal decline [11].