The Zacks Tobacco industry is navigating a complex operating environment marked by persistent pressure on cigarette volumes, caused by inflationary stress, evolving consumer preferences and stringent regulatory frameworks. Rising health awareness and tighter restrictions on tobacco sales and marketing are accelerating the decline in traditional cigarette consumption. At the same time, elevated input costs, including tobacco leaf, energy and labor, along with increased investments in next-generation products ...

Core Insights - Philip Morris International (PM) reported full-year 2025 revenue of $40.6 billion, with smoke-free products contributing approximately $17 billion, while British American Tobacco (BTI) reported Q4 2025 EPS of $2.55, exceeding estimates, and raised its 2026 quarterly dividend to $0.835 from $0.749 [1] - PM's IQOS maintained a 76% global market share in heated tobacco, and ZYN saw a 37% growth in shipments in the U.S. with 794 million cans shipped [1] - PM trades at a trailing P/E of 23x, reflecting consistent earnings and growth in smoke-free products, while BTI trades at 13x, offering a higher yield but with a more volatile earnings history [1] Financial Performance - PM's adjusted operating income margin expanded to 40.4%, with management guiding for adjusted diluted EPS of $8.38 to $8.53 in 2026, indicating an expected growth of 11% to 13% [1] - BTI's Q4 2025 EPS of $2.55 beat the estimate of $2.51, but its smoke-free brands are growing at a slower pace compared to PM [1] - PM's revenue growth is driven by its smoke-free segment, while BTI's earnings history shows inconsistencies, including a -$0.66 EPS in Q4 2024 and a significant miss in Q2 2025 [1] Investment Considerations - PM is positioned as a growth stock with a focus on smoke-free transformation, appealing to investors seeking capital appreciation alongside dividend growth [1] - BTI offers a higher dividend yield of 5.64% compared to PM's 3.26%, making it attractive for income-focused investors despite its lower growth narrative [1] - The valuation gap between PM and BTI reflects differing investment profiles, with PM commanding a premium due to its consistent earnings performance and growth potential [1]

Core Insights - Altria Group, Inc. is focusing on its smoke-free strategy, particularly through its oral nicotine portfolio, which has shown significant growth, with nicotine pouches driving a 14% volume increase over the past six months [1][8] Oral Nicotine Market Performance - By Q4 2025, oral nicotine pouches represented nearly 57% of the total oral category, gaining 10.4 share points year over year, indicating a rapid consumer shift within oral tobacco [2] - Altria's flagship pouch brand, on!, demonstrated resilience amid competitive pricing pressures, with a 3% price increase while the broader category saw a 12% decline in pricing [3] - For the full year 2025, on! shipment volumes increased by 10.9% to over 177 million cans, maintaining an 8.2% retail share of the total oral tobacco category, up 0.1 share point from the previous year [3][8] Future Growth Potential - The momentum for Altria's oral nicotine products is expected to strengthen further in 2026 with the national launch of on! PLUS, a premium pouch that has received FDA marketing authorization for three varieties, targeting high-velocity segments [4] Competitive Landscape - Philip Morris International Inc. reported net revenues of $16.9 billion from its smoke-free segment in 2025, contributing 41.5% to total revenues, driven by the global expansion of IQOS and increased U.S. ZYN shipments [5] - Turning Point Brands, Inc. experienced a remarkable 627.6% year-over-year increase in its Modern Oral segment, with white nicotine pouches accounting for 30.8% of total business by the end of Q3 2025 [6] Valuation and Estimates - Altria's shares have increased by 10.9% in the past month, outperforming the industry growth of 5% [7] - The company trades at a forward price-to-earnings ratio of 12.32X, lower than the industry average of 16.2X [9] - The Zacks Consensus Estimate for Altria's earnings per share for 2026 is $5.57, with a slight decrease of 1 cent, while the estimate for 2027 has increased by 5 cents to $5.76 [10]

Core Insights - Altria Group, Inc. and Philip Morris International Inc. are leading companies in the global tobacco industry, focusing on cigarette and nicotine product sales amid changing consumer preferences [1][2] - Altria has a market capitalization of approximately $116.6 billion, while Philip Morris has a larger market value of around $291.9 billion, reflecting its international presence and leadership in next-generation products [1][2] Altria Group, Inc. Overview - Altria's investment appeal is supported by resilient cash-flow generation and consistent shareholder returns, with a 4.4% adjusted EPS growth in 2025 and approximately $8 billion returned to shareholders through dividends and share repurchases [3][4] - The smokeable products segment generated over $11 billion in adjusted operating income in 2025, with margins expanding to 63.4% due to strong pricing execution [4] - Altria is advancing its smoke-free portfolio, particularly in modern oral nicotine, with a 10.9% shipment volume growth for the on! brand in 2025 [5] - Domestic cigarette volumes declined approximately 9.5% in 2025, indicating ongoing pressure in the combustible category [6] Philip Morris International Inc. Overview - Philip Morris demonstrated a strong growth profile in 2025 with a 14.8% adjusted EPS growth, net revenues exceeding $40 billion, and organic operating income growth of 10.6% [7][8] - Smoke-free products accounted for 41.5% of total net revenues and nearly 43% of gross profit in 2025, with IQOS heated tobacco units and ZYN nicotine pouches showing significant growth [9][10] - Despite a 1.5% decline in combustible cigarette shipments, pricing actions helped lift combustible net revenues by 2.5% [10] - Management projects 2026 adjusted EPS growth of 11.1% to 13.1%, indicating confidence in the company's operating momentum [11] Comparative Analysis - Altria's shares increased by 26.1% over the past year, outperforming Philip Morris's 21.7% gain, although both lagged behind the industry growth of 33.8% [12] - Altria trades at a forward P/E ratio of 12.4, while Philip Morris trades at a forward P/E of 21.82, indicating differing valuations [16] - Philip Morris is viewed as the stronger growth story due to its accelerated shift toward smoke-free products and global scale, while Altria is seen as a stable income choice reliant on its U.S. combustible franchise [17]

Core Insights - Philip Morris International Inc. (PM) is recognized as one of the 14 Best Low Volatility Dividend Stocks to Invest in [1] - Citi analyst Simon Hales raised the price target for PM to $210 from $200, maintaining a Buy rating, reflecting confidence in the company's growth, particularly in smoke-free products [2] Financial Performance - In Q4 2025, PM reported a strong year with total net revenue exceeding $40 billion, with smoke-free products contributing 41.5% or nearly $17 billion [5] - The adjusted operating margin improved to above 40%, indicating enhanced efficiency and profitability [5] - The company reaffirmed its three-year CAGR targets for organic operating income and currency-neutral EPS [6] Product Growth and Strategy - Smoke-free product volumes increased by 12.8% in 2025, with organic smoke-free gross profit rising by 18.7%, indicating both growth and profitability in this segment [3] - IQOS remains the primary growth driver, with shipments and adjusted IMS increasing by about 11%, and the smoke-free footprint expanded to 106 markets [4] - ZYN and VEEV saw their shipment volumes more than double in international markets, with ZYN gaining traction outside traditional regions and VEEV becoming the fastest-growing closed pod brand globally [4] Market Position and Future Outlook - 27 markets have reached a tipping point where over half of total net revenue comes from smoke-free products, showcasing the shift from traditional cigarettes to reduced-risk alternatives [5] - The company is focused on strengthening its balance sheet, aiming to reduce its leverage ratio to around 2x by the end of 2026 [6]

Summary of Philip Morris International (PMI) Conference Call Company Overview - **Company**: Philip Morris International (NYSE: PM) - **Event**: 2026 Conference on February 18, 2026 - **Key Speakers**: CEO Jacek Olczak, CFO Emmanuel Babeau Core Industry Insights - PMI is undergoing a significant transformation towards smoke-free products, with over **40%** of revenues and gross profit now derived from these products [1][3] - The company has achieved **$17 billion** in smoke-free revenues and **180 billion** units in volume, exceeding its target of being present in **100 markets** by 2025, now reaching **106 markets** [6][7] - PMI aims for **two-thirds** of its revenues to come from smoke-free products by **2030** [7] Financial Performance and Growth Strategy - PMI is targeting **double-digit EPS growth** over the next several years, with a focus on margin expansion and free cash flow generation [1] - The company expects **high single-digit to low teen growth** for smoke-free volumes from **2026 to 2028**, which will offset declines in combustible products [40] - Projected organic revenue growth is between **6%-8%**, with operating income growth of **8%-10%** [41] - Adjusted EPS growth is targeted between **9%-11%** [42] Market Dynamics - The company has seen a **5-fold** acceleration in volume decline in markets where smoke-free products are available, compared to those where they are not [15] - In regions where smoke-free products are established, they represent **62%** of total revenues in the top five operating income markets [9] - PMI has successfully penetrated markets like Taiwan, achieving a **6%** market share in combined cigarettes and heated tobacco products within three months of entry [11] Regulatory Environment - There is a growing recognition of the potential of smoke-free products, with more mature discussions around nicotine and its role in smoking-related diseases [17][18] - Regulatory momentum is shifting positively, with increasing acceptance of smoke-free products globally [20] - Major markets like India, Turkey, Brazil, and Vietnam, which currently do not allow smoke-free products, represent significant future opportunities [21] Consumer Trends - The company is observing a growing interaction with smoke-free products, indicating an openness among consumers to transition from combustible cigarettes [26] - The multi-category strategy, offering heat-not-burn, vape, and pouches, is accelerating growth, with markets showing over **15%** growth when multiple products are available [31] Investment and Infrastructure - PMI has established a robust infrastructure with **1.5 million** points of sale for smoke-free products and **8,000** brand retail networks [33] - The company is focusing on productive investments in marketing and brand building while seeking efficiencies in back-office costs [51] Shareholder Returns - PMI has a target payout ratio of **75%** of net profit into dividends, with a **9%** increase in dividends noted in 2025 [53] - The company has consistently outperformed indices like the S&P 500 and the MSI Tobacco Index in total shareholder return [54] Conclusion - PMI is positioned as a leader in the transition to smoke-free products, with a clear growth strategy, strong financial performance, and a commitment to shareholder returns. The ongoing transformation is supported by favorable regulatory trends and increasing consumer acceptance of smoke-free alternatives.

Championing a Smoke-Free World CAGNY Conference February 18, 2026 Jacek Olczak, Group CEO PMI Emmanuel Babeau, Group CFO PMI Introduction • A glossary of terms as well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures for non-GAAP financial measures cited in this presentation are available on our Investor Relations website with additional non-GAAP reconciliations available at the end of this presentation 2 Introduction • A glossary of terms as well as ...

Core Insights - Altria Group, Inc. is focusing on sustaining its earnings per share (EPS) growth, projecting adjusted EPS of $5.56 to $5.72 for 2026, indicating a growth of approximately 2.5% to 5.5% [1][8] Earnings and Financial Management - The company is experiencing a decline in cigarette shipment volumes, which dropped about 10% in 2025, prompting reliance on price increases to maintain profitability and adjusted operating margins above 60% [2][8] - Share repurchases are significant for EPS growth, with $1 billion remaining under its repurchase authorization through the end of 2026, allowing the company to enhance per-share earnings by reducing shares outstanding [3][8] Investment in New Products - Altria is investing in smoke-free products, including nicotine pouches and e-vapor offerings, which are expanding but require ongoing investment, potentially limiting their near-term contribution to earnings [4] Competitive Landscape - In comparison, Philip Morris International Inc. is projected to achieve adjusted EPS growth of 11.1% to 13.1% in 2026, supported by its smoke-free business contributing over 40% of revenues [5] - Turning Point Brands, Inc. is also expected to maintain steady EPS growth through pricing discipline and expansion in modern oral nicotine products [6] Stock Performance and Valuation - Altria's shares have increased by 8.9% in the past month, outperforming the industry growth of 6.8% [7] - The company trades at a forward price-to-earnings ratio of 12.02X, lower than the industry average of 16.08X [9] - The Zacks Consensus Estimate for Altria's 2026 EPS has slightly decreased to $5.57, while the estimate for 2027 has increased to $5.75 [10]

Summary of Alimentation Couche-Tard 2026 Investor Day Company Overview - Alimentation Couche-Tard operates nearly 17,300 locations worldwide and employs approximately 150,000 team members, making it a leading destination for convenience and mobility [2][4] Strategic Growth Plans - The company plans to open over 100 new stores across North America this year, with over 1,000 new locations in the pipeline for future development [3] - The Fresh Food Fast program has gained momentum, with over 6,000 stores globally offering meal deals that are popular in North America [4] Customer Engagement and Loyalty - The Inner Circle loyalty program has surpassed 12.5 million members in the U.S., while the Extra 2.0 program is being rolled out in Europe [5] - The company sold 15.4 billion gallons of fuel last year, emphasizing its role in fueling customer journeys [4] Supply Chain and Operational Improvements - Three new U.S. distribution centers are being established to support 1,600 stores, enhancing delivery speed and reliability [7] - The RELEX inventory platform is being implemented to improve accuracy and reduce spoilage, with plans for rollout in North America [7] Employee Engagement and Culture - Couche-Tard has been recognized as an exceptional workplace by Gallup for four consecutive years, highlighting the importance of its one-team culture [8] Challenges and Learnings - The company faced unexpected consumer softness and inflationary pressures, which impacted the execution of its "10 For The Win" strategy [20] - Category changes and food execution complexities were identified as areas needing improvement [21] Successes and Achievements - Improved core operating metrics and people metrics have been noted, with a disciplined approach to network growth [22] - Digital transformation efforts have advanced significantly, positioning the company ahead in this area [23] Vision and Future Strategy - The new vision is to become the world's favorite stop for people on the go, adapting to changing consumer behaviors and preferences [46] - The strategy focuses on long-term profitable growth, emphasizing core business areas such as fuel, nicotine, and thirst [57] Financial Performance and Market Position - The company aims to grow organically, with a focus on increasing traffic to its stores [58] - Positive trends in traffic and market share in core categories have been observed, with a commitment to maintaining competitive fuel margins [71] Customer Promise and Values - The company emphasizes convenience, speed, and efficiency as key customer expectations, with ongoing investments in technology to enhance customer readiness [51] - Core values include humility, customer obsession, and a decentralized operating model that empowers local teams [27][28] Conclusion - Alimentation Couche-Tard is committed to leveraging its scale and operational excellence to drive growth and enhance customer experiences, while continuously adapting to market changes and consumer needs [64]

Investment Rating - The industry investment rating is "Positive" [2] Core Insights - The report highlights that Philip Morris International (PMI) has set a three-year growth plan focusing on new tobacco products, targeting a revenue CAGR of 6%-8% and an operating profit CAGR of 8%-10% from 2026 to 2028 [3] - PMI's revenue for 2025 reached $40.65 billion, a year-on-year increase of 7.3%, with new tobacco product revenue at $16.85 billion, growing by 15.0% [2][3] - The report anticipates significant growth in the U.S. market, particularly with the launch of IQOS ILUMA, which is expected to stimulate the heat-not-burn (HNB) segment [3] Summary by Sections Financial Performance - In Q4 2025, PMI's revenue was $10.36 billion, up 6.8% year-on-year, with new tobacco revenue at $4.35 billion, reflecting a 12.0% increase and accounting for 42% of total revenue [2][3] Market Dynamics - PMI's HNB sales reached 155.1 billion units in 2025, a growth of 11.0%, maintaining a global market share of approximately 76% [4] - In Japan, HNB product penetration reached 32.6% in Q4, with HNB revenue exceeding 50% in December [4] Product Growth - The report notes significant growth in smokeless products, with sales of oral tobacco and vaping products increasing by 18.5% and 100% year-on-year, respectively [5] - The U.S. market for oral tobacco has reached high single-digit penetration, with ZYN maintaining a market share close to two-thirds [5]