Key Takeaways Altria holds strong U.S. cigarette share while expanding heated tobacco, oral nicotine and e-vapor options.on! shipments reached 133.6M cans YTD as Ploom filings and on! PLUS enhance MO's smoke-free reach.Philip Morris' smoke-free products drove 41% of net revenues with a record $3.1B gross profit.Altria Group, Inc. ((MO) and Philip Morris International Inc. ((PM) stand as two of the most influential players in the global tobacco landscape, each commanding strong brand portfolios and pursuing ...

An updated edition of the Sept. 26, 2025, article.Investing in the stock market often brings to mind themes of growth, innovation, and long-term value creation, but beneath the surface lies a niche segment that has historically delivered outsized returns: sin stocks. These are companies operating in industries often considered socially or morally controversial, including alcohol, tobacco, gambling, weapons manufacturing, and, at times, cannabis. Despite their reputational baggage, sin stocks tend to benefit ...

Core Insights - Altria Group, Inc. is at a critical juncture as nicotine pouches capture 55.7% of the U.S. oral tobacco market, marking an 11.1-point year-over-year increase, which is altering market dynamics [1][8] - The company faces challenges in maintaining its market share in the rapidly growing oral segment, with its on! brand holding an 8.7% share of the total U.S. oral tobacco category and a reduced 15.6% share in the nicotine pouch segment, down 4.1 points due to competitive promotional activities [1][8] Market Dynamics - Competitor promotions have led to a 7% decrease in average retail prices for nicotine pouches nationally, with some major retail chains experiencing price drops exceeding 70% [2] - Altria's on! brand saw a retail price increase of approximately 1.5% during the same period, indicating a divergence from the broader category pricing trends [2] - Despite the promotional environment, Altria reported steady retail takeaway for on!, suggesting consistent consumer demand [2] Product Development - To enhance its competitive position, Altria is launching on! PLUS, a next-generation nicotine pouch aimed at improving comfort, nicotine delivery, and flavor satisfaction [3] - The product has been introduced in Florida, Texas, and North Carolina, with early research indicating higher purchase intent compared to several competing brands [3] Competitive Landscape - Philip Morris International Inc. reported a 16.9% increase in global pouch shipments and a 39% growth in U.S. ZYN offtake, supported by extensive commercial activities and investments in capacity [5] - Turning Point Brands, Inc. experienced a remarkable 627.6% year-over-year growth in modern oral segment net sales, reaching $36.7 million, which now constitutes nearly 30.8% of its total revenues [6] Financial Performance - Altria's shares have declined by 9.8% over the past month, contrasting with a 1.8% decline in the industry [7] - The company trades at a forward price-to-earnings ratio of 10.47X, lower than the industry average of 14.12X [10] - Zacks Consensus Estimates project year-over-year earnings growth of 6.1% for 2025 and 2.5% for 2026 [11]

Core Insights - Altria Group, Inc. has formed an alliance with KT&G to explore international opportunities in modern oral nicotine products, aiming to expand its market presence beyond the U.S. [1][9] - The collaboration includes Altria acquiring a stake in Another Snus Factory, enhancing its product offerings in regions with growing demand for complex flavor profiles [2] - The partnership allows Altria to utilize KT&G's global infrastructure and product development expertise while contributing its strengths in commercialization and brand management [3] - The alliance is a strategic move towards expanding Altria's presence in smoke-free categories globally, as the modern oral market is experiencing rapid growth [4] - Successful execution of this partnership is crucial for Altria to strengthen its position in next-generation products and work towards a smoke-free future [5] Competitive Landscape - Philip Morris International Inc. has established itself as a leader in the smoke-free transition, with smoke-free products contributing 41% of its net revenues in Q3 2025, and its nicotine pouch brand ZYN showing 39% growth [6] - Turning Point Brands, Inc. is also experiencing significant growth, with its Modern Oral portfolio representing nearly one-third of sales and revenues rising 31.2% year-over-year to $119 million in Q3 2025 [7] Financial Performance - Altria's shares have declined by 12.8% over the past month, compared to a 4% decline in the industry [8] - Altria trades at a forward price-to-earnings ratio of 10.46X, lower than the industry average of 14.07X [11] - The Zacks Consensus Estimate indicates year-over-year earnings growth of 6.1% for 2025 and 2.5% for 2026 [12]

Core Insights - Altria Group, Inc.'s oral tobacco business achieved a significant margin performance in Q3 2025, with adjusted operating company income margins increasing by 2.4 percentage points to 69.2% despite a decline in segment revenues and a 9.6% drop in overall shipment volumes [1][7] - The margin expansion is attributed more to pricing power rather than product mix, as Altria raised prices while maintaining strong pricing discipline, even as competitors in the pouch category reduced prices [1][2][3] Financial Performance - The oral tobacco margin of 69% reflects effective pricing strategies and cost control in a competitive market, indicating that Altria can sustain profitability through disciplined execution [3][7] - Altria's shares have decreased by 12.5% over the past month, contrasting with the industry's decline of 5.7% [6] - The forward price-to-earnings ratio for Altria is 10.33X, lower than the industry average of 13.44X, suggesting potential undervaluation [8] Earnings Estimates - The Zacks Consensus Estimate indicates year-over-year earnings growth of 6.1% for 2025 and 2.5% for 2026 [9] - Current earnings estimates for Q4 2025 and Q1 2026 are projected at $1.30 and $1.24, respectively, with the current year estimate at $5.43 and next year at $5.57 [10]

Core Insights - The London Company reported a 6.0% gross (5.8% net) appreciation in its portfolio for Q3 2025, outperforming the Russell 1000 Value Index which increased by 5.3% [1] - The performance was driven by a favorable stock selection, although sector exposure presented some headwinds [1] Company Overview: Philip Morris International Inc. (NYSE:PM) - Philip Morris International Inc. is a tobacco company that offers both traditional cigarettes and smoke-free products [2] - The stock experienced a one-month return of -4.90% but gained 17.84% over the last 52 weeks, closing at $147.66 per share with a market capitalization of $229.853 billion on November 4, 2025 [2] - The company’s smoke-free offerings, particularly IQOS and ZYN, are showing growth, with higher margins on these products [3] Investment Sentiment - Philip Morris International Inc. was held by 111 hedge fund portfolios at the end of Q2 2025, an increase from 104 in the previous quarter [4] - Despite its potential, the company is not considered among the top 30 most popular stocks among hedge funds, with some analysts suggesting that certain AI stocks may offer greater upside potential [4]

Core Viewpoint - Philip Morris International Inc. is recognized for its significant upside potential, supported by a strong performance in its smoke-free product portfolio and positive earnings growth [1][2]. Financial Performance - In the third quarter, Philip Morris reported a 13.2% increase in earnings per share (EPS), with diluted EPS rising 17.3% to $2.24 [2]. - The company anticipates full-year EPS growth between 13.5% and 15.1%, projecting EPS to range from $7.39 to $7.49 [3]. - Organic revenue growth is expected to be between 6% and 8% for the year [3]. Product Strategy - Philip Morris is strategically shifting from traditional cigarettes to a diverse range of smoke-free alternatives, including heated tobacco products (e.g., IQOS), e-vapor, and oral nicotine pouches (e.g., ZYN) [4]. - The company's smoke-free portfolio is outpacing industry growth, contributing to positive total volumes and top-line growth [2][3]. Analyst Ratings - Stifel has reiterated a 'Buy' rating on Philip Morris, setting a price target of $180, reflecting confidence in the company's growth trajectory [1][2].

Core Insights - Altria Group, Inc.'s oral tobacco segment showed strong margin performance in Q3 2025, driven by Helix's effective execution and the launch of the on! PLUS nicotine pouch [1][8] - Despite a 9.6% decline in total oral tobacco domestic shipment volumes, the segment's adjusted operating companies income (OCI) margin increased by 2.4 percentage points to 69.2% [2] - The launch of on! PLUS comes amid intense price competition, with average nicotine-pouch prices down 7% nationally, yet Altria managed to increase retail prices by approximately 1.5% in Q3 [3] Product Launch and Market Position - The on! PLUS product emphasizes consumer comfort, nicotine delivery, and flavor satisfaction, outperforming rival brands in early tests [4] - The FDA's inclusion of on! PLUS in its pilot program for pouch reviews may provide Altria with regulatory advantages [4] - Management remains cautious about expansion timing but is optimistic about the product's differentiation and market potential [4] Competitive Landscape - Philip Morris International Inc. continues to lead the global oral nicotine market with its ZYN brand, achieving a 17.7% growth in smoke-free net revenues in Q3 2025 [5] - Turning Point Brands, Inc. reported nearly eightfold year-over-year growth in modern oral revenues, reaching $30.1 million in Q2 2025, and raised its full-year guidance to $100-$110 million [6] Financial Performance and Valuation - Altria's shares have decreased by 13.5% in the past month, compared to a 7.1% decline in the industry [7] - The company's forward price-to-earnings ratio is 10.3X, lower than the industry's average of 13.79X [9] - The Zacks Consensus Estimate indicates year-over-year earnings growth of 6.1% for 2025 and 2.6% for 2026 [10]

Core Insights - Philip Morris International (PMI) has shown significant stock performance, with a 68% increase over the past two years and a 22% rise year-to-date, indicating strong investor interest despite regulatory challenges in the tobacco industry [1][2][4] - The company is transitioning towards a smoke-free future, focusing on innovative products like iQOS and ZYN, which are gaining traction in the market [5][12][21] - PMI has a strong dividend history, raising dividends for 18 consecutive years, with a recent increase of nearly 9%, resulting in a yield close to 4% [9][10][22] Stock Performance - PM stock has surged 68% over the past two years and 12% in the last 52 weeks, with a year-to-date increase of about 22% [1][2] - The stock is currently trading at 20.9 times forward adjusted earnings, reflecting a premium investors are willing to pay for its transition to smoke-free products [8] - Despite a recent dip of 10% in the stock price, analysts view this as a potential buying opportunity, with several maintaining "Buy" ratings and optimistic price targets [6][17][20] Financial Performance - PMI reported Q3 revenue of $10.8 billion, a 9.4% year-over-year increase, driven by strong pricing in combustible tobacco and growth in smoke-free products [11][12] - Adjusted EPS for Q3 was $2.24, up 17.3% annually, exceeding expectations due to record smoke-free profits [11] - The company has a payout ratio of 74.7%, indicating a commitment to returning cash to investors [10] Future Outlook - For 2025, adjusted EPS is forecasted between $7.46 and $7.56, suggesting growth of 13.5% to 15.1%, with total product volume expected to rise by about 1% [14][16] - Organic revenue growth is projected between 6% and 8%, with capital expenditures focused on smoke-free innovations [15] - Analysts expect continued growth in smoke-free product revenues, with a strong market presence anticipated for iQOS and ZYN [19][20] Market Position - PMI is one of the largest tobacco companies globally, with a market capitalization of approximately $244.2 billion and a workforce of over 83,000 [3] - The company is navigating regulatory pressures and declining smoking rates by investing in smoke-free alternatives, which are now 41% of total sales [12][21] - The stock has a consensus "Moderate Buy" rating, reflecting confidence in PMI's resilience and long-term growth potential [20][22]

Core Insights - Income investing is most effective when dividends are linked to sustainable business models rather than yield traps [2] - The best opportunities combine high current income with credible catalysts for future payouts [2] Company Analysis - Philip Morris International (NYSE: PM) has raised its dividend by 8.9% to an annualized $5.88, resulting in a current yield of 3.84% [5] - Smoke-free products accounted for 39% of total revenue in 2024, a significant increase from negligible levels a decade ago [6] - The company has seen success with Iqos heated-tobacco devices in Japan and parts of Europe, and ZYN nicotine pouches are the fastest-growing nicotine format in the U.S. [6] - Recent developments include the dismissal of a pricing antitrust lawsuit against ZYN and the FDA's withdrawal of a proposed menthol cigarette ban, which strengthens the company's market position [7] Valuation and Yield - A pharmaceutical company is trading at 8 times forward earnings with a 7% yield, while raising revenue guidance and reentering the obesity drug market [9] - Both Philip Morris and the pharmaceutical company offer immediate income along with turnaround potential, although there are regulatory and execution risks involved [9]