Core Insights - Altria Group, Inc. demonstrated resilience in its fourth-quarter 2025 performance, maintaining earnings growth despite ongoing cigarette volume declines and regulatory challenges [1][9] - The company has effectively utilized pricing power, disciplined cost management, and strategic investments in smoke-free alternatives to protect margins [1][21] Stock Performance - Following the fourth-quarter results released on January 29, 2026, Altria's shares increased by 12%, indicating improved investor confidence in its earnings stability [2] - Over the past three months, Altria's shares rose by 15.9%, outperforming the Zacks Consumer Staples sector's 12.1% and the S&P 500's 3.7% [3] - Compared to peers, Altria's performance was solid, with notable gains from Turning Point Brands (31.9%), Philip Morris (21.8%), and British American Tobacco (11.3%) [4] Financial Results - Altria's fourth-quarter adjusted earnings remained flat year-over-year at $1.30, with net revenues declining by 2.1% to $5.8 billion, primarily due to lower revenues in the smokeable products segment [9][10] - Domestic cigarette shipment volumes fell by 7.9% in the quarter, contributing to revenue pressures, but adjusted operating companies income (OCI) remained resilient at $2.64 billion with margins at 60.4% [11] - The Oral Tobacco Products segment also contributed positively, with adjusted OCI declining slightly to $440 million but showing growth in the modern oral portfolio [12] Capital Returns - Altria paid $7 billion in dividends in 2025, including $1.8 billion in the fourth quarter, showcasing strong cash generation capabilities [13] - The company repurchased 4.8 million shares for $288 million in the fourth quarter, with a total of 17.1 million shares repurchased for approximately $1 billion in the full year [14] 2026 Outlook - Management expects 2026 adjusted EPS in the range of $5.56 to $5.72, indicating growth of 2.5% to 5.5% from 2025 [15] - The outlook is based on anticipated pricing strength, cost discipline, and planned investments in smoke-free products, with capital expenditures projected between $300 million and $375 million [16] Valuation - Altria is currently trading at a forward P/E ratio of 11.98X, significantly lower than the industry average of 16.07X and the S&P 500's average of 22.9X, making it attractive for value-focused investors [17] - Compared to peers, Altria's valuation is appealing, as Philip Morris and Turning Point Brands trade at higher multiples of 22.39X and 31.65X, respectively [18] Investor Sentiment - The post-earnings rally reflects growing recognition of Altria's consistent execution, resilient margins, and dependable cash-return framework [21] - Despite ongoing structural challenges, the company's ability to offset pressures through pricing and cost management enhances its appeal for long-term, income-oriented investors [21]

Core Insights - The tobacco sector is primarily represented by two industry leaders: Altria Group, Inc. and Philip Morris International Inc., each with distinct geographic focuses and strategies to adapt to the evolving nicotine landscape [1][2] Altria Group, Inc. (MO) - Altria focuses on the U.S. market, leveraging its Marlboro brand while expanding into smoke-free alternatives like NJOY and oral nicotine products [2] - In 2025, Altria achieved a 4.4% increase in adjusted earnings per share and returned approximately $8 billion to shareholders through dividends and share repurchases, highlighting its strong cash-flow generation [3] - The smokeable products segment generated over $11 billion in adjusted operating income with margins expanding to 63.4%, demonstrating Altria's pricing power despite a 9.5% decline in domestic cigarette volumes [4][6] - Altria's smoke-free strategy is advancing, with on! brand shipment volumes rising 10.9% in 2025, and plans for a national rollout of on! PLUS to capture growth in the nicotine pouch category [5] - The long-term investment outlook for Altria is challenged by structural and regulatory headwinds, with ongoing volume declines in traditional cigarettes [6] Philip Morris International Inc. (PM) - Philip Morris is transitioning towards smoke-free products, with smoke-free offerings accounting for 41% of total net revenues and 42% of gross profit in Q3 2025, driven by strong performance from IQOS, ZYN, and VEEV [7][8] - The company reported a record quarterly smoke-free gross profit of $3.1 billion, indicating a shift towards a more sustainable profit model [7] - Philip Morris' operational discipline and productivity initiatives have supported margin expansion and earnings growth, despite a 3.2% decline in cigarette shipment volumes in Q3 [10][11] - The reliance on smoke-free products introduces risks, as any slowdown in adoption could impact the ability to offset declines in combustible product volumes [11] Stock Performance and Valuation - Over the past year, Altria's shares increased by 15.9%, underperforming Philip Morris, which surged by 36.5%, and the industry's growth of 38.7% [12] - Altria's forward P/E ratio is 10.7, slightly below its one-year median, while Philip Morris' forward P/E ratio stands at 21.12, above its median [13] - Philip Morris is viewed as a more promising investment due to its diversified international presence and established portfolio of reduced-risk products, while Altria's growth is limited by its heavy exposure to the U.S. cigarette market [16][17]

Core Insights - Altria Group's stock price fell over 5% following significant market share losses in the cigarette sector [1] Market Performance - Altria's domestic cigarette shipment volumes decreased by 7.9% in Q4, reflecting a continued decline in smoking rates in the U.S. [2] - The retail market share of Altria's Marlboro brand dropped to 39.8%, a year-over-year decline of 1.5 percentage points [2] Product Segments - Altria's oral tobacco products also experienced a decline, with shipment volumes falling by 6.3% due to market share losses [3] - The on! brand's share in the nicotine pouch category decreased by 5.3 percentage points to 13.4% [3] Financial Performance - Altria's revenues, net of excise taxes, slightly declined by less than 1% to $5.1 billion, with price increases offsetting lower shipment volumes [4] - Adjusted earnings per share remained flat at $1.30, supported by stock buybacks [4] - Management projects a growth in full-year adjusted earnings of 2.5% to 5.5% in 2026, estimating a range of $5.56 to $5.72 per share, aided by cost-cutting measures [4]

Financial Data and Key Metrics Changes - In 2025, adjusted diluted earnings per share grew by 4.4% and the company returned $8 billion to shareholders through dividends and share repurchases combined [4][24] - The smokable product segment delivered over $11 billion in adjusted operating income (OCI) for the full year, expanding adjusted OCI margins by 1.8 percentage points to 63.4% [16] - For the fourth quarter, adjusted OCI declined by 2.4%, and adjusted OCI margins contracted by 0.8 percentage points to 60.4% [16] Business Line Data and Key Metrics Changes - Domestic cigarette volumes declined by 7.9% in the fourth quarter and 10% for the full year [16] - The oral tobacco product segment retail share was 29.6% for the fourth quarter and 31.9% for the full year [21] - Total segment reported shipment volume decreased 6.3% for the fourth quarter and 5.5% for the full year [21] Market Data and Key Metrics Changes - The estimated number of adult consumers in the e-vapor and oral tobacco categories grew to almost 30 million, reflecting the potential for tobacco harm reduction in the U.S. [6] - The e-vapor category grew approximately 15% in 2025, with illicit products representing approximately 70% of the category [7][8] - The nicotine pouch category grew an estimated 14% over the past six months, with oral nicotine pouches now representing nearly 57% of the total oral category [9] Company Strategy and Development Direction - The company is focused on advancing its smoke-free portfolio and building new pathways for long-term growth in international modern oral and non-nicotine innovations [15] - Strategic investments in retail merchandising and product innovation are planned to support the national launch of on! PLUS in 2026 [12] - The company intends to maintain a measured approach to investments in e-vapor until the regulatory framework is functioning effectively [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the primary driver of industry and smoke-free growth continues to be the widespread availability of illicit flavored, disposable e-vapor products [6] - The company expects to deliver 2026 full year adjusted diluted EPS in a range of $5.56-$5.72, representing a growth rate of 2.5%-5.5% from a $5.42 base in 2025 [14] - Management expressed confidence in the company's strategy and the opportunities ahead, emphasizing the importance of responsible participation in the e-vapor category [15] Other Important Information - The company recorded non-cash impairment charges of $1.3 billion related to e-vapor definite-lived intangible assets and goodwill [22] - The company paid $7 billion in dividends in 2025, marking its 60th increase in the last 56 years [24] Q&A Session Summary Question: Can you provide any color on the scope of the import/export program? - Management indicated that the program involves both upfront investments and the opportunity for duty drawback, setting up manufacturing capabilities for international markets [31] Question: Is the elevated CapEx associated with the investments for import/export a one-time increase? - Management confirmed that the primary driver of the increase is the investments for the import/export business, but they are not guiding for future CapEx [33] Question: How is the promotional strategy behind Basic affecting net price realization? - Management clarified that the strategy around Basic is independent of the duty drawback and is aimed at capturing consumers under economic pressure [40] Question: Are there any signs of increased smoking incidence among younger legal-aged nicotine users? - Management stated that there are no trends indicating increased smoking incidence among younger cohorts, emphasizing the need for expedited product authorizations [50] Question: What is the pricing strategy for on! PLUS? - Management believes on! PLUS is a differentiated product that commands a premium in the marketplace, with various introductory price promotions planned [51]

Altria's Fourth-Quarter and Full-Year 2025 Earnings Conference Call January 29, 2026 1 | ALCS | Q4 2025 | 1.29.26 | For Investor Purposes ONLY Safe Harbor Statement Statements, including earnings guidance, in this presentation that are not reported financial results or other historical information are "forward-looking statements" within the meaning of Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current plans, estimates and expectations, and are not guarante ...

Core Insights - Altria Group, Inc. is shifting its business focus towards smoke-free products to counteract declining combustible volumes, with significant progress noted in the third quarter of 2025, particularly in oral nicotine and heated tobacco segments [2][5] Smoke-Free Product Performance - The on! nicotine pouch brand maintained a stable retail market share of 8.7% in Q3 2025, with year-to-date shipment volumes increasing by 14.8% to 133.6 million cans, indicating strong performance in a competitive market [3][9] - Altria has launched on! PLUS in select U.S. markets, targeting both existing smokeless users and consumers switching from other brands, which is seen as a strategic move to enhance its oral nicotine portfolio [4][9] Regulatory Developments - Altria has reached a significant regulatory milestone by filing a combined premarket tobacco product application and modified risk tobacco product application with the FDA for the Ploom device and Marlboro heated tobacco sticks, marking a crucial step in introducing Ploom to American consumers [5] Competitive Landscape - Philip Morris International Inc. reported a 16.6% increase in smoke-free shipment volumes in Q3 2025, with smoke-free products now constituting 41% of its total net revenues, showcasing strong growth in this sector [6] - Turning Point Brands, Inc. experienced a remarkable 627.6% year-over-year increase in Modern Oral sales, which accounted for 30.8% of its total business, reflecting the growing importance of oral nicotine in its smoke-free strategy [7] Financial Performance and Valuation - Altria's shares have increased by 8.3% over the past month, slightly underperforming the industry growth of 9.2% [8] - The company trades at a forward price-to-earnings ratio of 11.09X, which is lower than the industry average of 15.3X, indicating potential value [10] - The Zacks Consensus Estimate projects year-over-year earnings growth of 6.3% for the current financial year and 2.3% for the next [11]

Core Insights - Altria Group, Inc. is adjusting its growth strategy in response to declining cigarette demand, focusing on a diversified smoke-free portfolio to stabilize growth over time [1][4] Group 1: Altria's Strategy and Performance - Domestic cigarette shipment volumes for Altria fell by 8.2% in Q3 2025, influenced by the rise of flavored disposable e-vapor products and tighter consumer spending [1][8] - Altria is emphasizing a diversified smoke-free portfolio that includes oral nicotine, e-vapor, and heated tobacco to adapt to changing consumer preferences [1][4] - The oral nicotine segment is showing the strongest progress, with Altria's nicotine pouch brand, on!, holding an 8.7% retail share of the total oral tobacco category in the first nine months of 2025 [2] - Altria launched on! PLUS, a premium nicotine pouch aimed at traditional smokeless tobacco users and competing pouch consumers [2][8] - The company is facing challenges in the e-vapor market as it integrates NJOY, while also advancing its heated tobacco efforts through the Horizon joint venture [3][4] Group 2: Competitive Landscape - Philip Morris International Inc. is also shifting towards smoke-free products, with these products accounting for approximately 41% of its net revenues in Q3 2025, and shipment volumes increasing by 16.6% year over year [5] - Turning Point Brands, Inc. reported a significant increase in Modern Oral sales, which surged by 627.6% year over year to $36.7 million, representing about 30.8% of total net sales [6] Group 3: Financial Metrics and Estimates - Altria's shares have gained 0.6% over the past month, compared to the industry's growth of 5.2% [7] - The forward price-to-earnings ratio for Altria is 10.3X, lower than the industry's average of 14.35X [9] - The Zacks Consensus Estimate for Altria's earnings implies year-over-year growth of 6.3% for 2025 and 2.3% for 2026 [10]

Core Insights - Altria Group, Inc.'s nicotine pouch business, operated through Helix Innovations, is becoming a significant driver of the company's oral tobacco segment as traditional categories decline [1][5] Group 1: Helix Innovations Performance - Helix shipped 42.2 million cans of on! in the third quarter of 2025, with shipments for the first nine months rising 14.8% to 133.6 million cans, outperforming other oral tobacco categories [2][9] - Helix's contribution to earnings quality is notable, stabilizing adjusted operating income and expanding margins despite a decline in total segment volumes [3][9] - Helix launched on! PLUS in select states, offering multiple flavors and nicotine strengths, which could further enhance growth [3] Group 2: Pricing and Market Position - Average nicotine pouch prices fell approximately 7% nationally, while on! retail prices increased by about 1.5% year over year in the third quarter [4][9] - on!'s retail share of total oral tobacco remained at 8.7%, unchanged sequentially and down 0.1 share point year over year [4] Group 3: Competitive Landscape - Philip Morris International Inc. reported a 36% increase in global ZYN can shipments and a 39% growth in U.S. ZYN offtake, supported by commercial activities and capacity investments [6] - Turning Point Brands, Inc. experienced a 627.6% year-over-year growth in modern oral segment net sales, now representing 30.8% of its revenues, and raised its full-year sales outlook to $125-$130 million [7] Group 4: Valuation and Earnings Estimates - Altria's shares have decreased by 0.8% in the past month, while the industry has grown by 1.6% [8] - Altria trades at a forward price-to-earnings ratio of 10.36X, lower than the industry's average of 14.47X [10] - The Zacks Consensus Estimate for Altria's 2025 and 2026 earnings implies year-over-year growth of 6.3% and 2.3%, respectively [11]

Core 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]

Valuation and Market Position - Altria Group, Inc. is trading at a forward 12-month price-to-earnings (P/E) ratio of 10.46, which is below the Tobacco industry's average of 13.89, the Consumer Staples sector's 16.02, and the S&P 500's 23.46, indicating an attractive valuation [1] - Compared to major peers, Altria remains discounted, with Philip Morris International Inc. at 18.12, Turning Point Brands, Inc. at 24.78, and British American Tobacco p.l.c. at 11.82 [1] Stock Performance - Over the past month, Altria's stock rose 1.1%, outperforming Turning Point Brands' 0.9% gain and Philip Morris' 3% decline, while British American Tobacco led with a 3.4% increase [6] - The Consumer Staples sector and the tobacco industry saw declines of 0.3% and 1.2%, respectively, while the S&P 500 gained 0.8%, highlighting Altria's strong positioning [7] Financial Fundamentals - In Q3 2025, Altria's adjusted earnings per share (EPS) increased by 3.6% to $1.45, with year-to-date EPS up 5.9%, driven by higher adjusted operating companies income (OCI) and a lower share count [11] - The smokeable products segment maintained impressive adjusted OCI margins of 64.4%, supported by effective pricing strategies [11] Product Strategy - Marlboro's premium-segment share expanded to 59.6%, reinforcing Altria's pricing power and brand strength, while the Basic brand gained share without detracting from Marlboro [12] - Altria's oral tobacco portfolio, particularly the on! brand, showed growth with a nearly 1% increase in volume and adjusted OCI margins expanding to 69.2% [13] Strategic Initiatives - Altria's collaboration with KT&G aims to enhance international modern oral expansion and explore operational efficiencies in traditional tobacco [14] - The company has consistently returned cash to shareholders, marking its 60th dividend increase in 56 years, which supports its stability and long-term growth [14] Volume Challenges - Altria faces significant volume pressures, with cigarette shipment volumes falling 8.2% in Q3 and 10.6% year-to-date, attributed to macroeconomic strains and competition from unregulated flavored disposable e-vapor products [15] Earnings Estimates - The Zacks Consensus Estimate for Altria's earnings has seen mixed revisions, with the 2025 EPS estimate increasing by 1 cent to $5.44, while the 2026 estimate decreased by 1 cent to $5.56 [18] - Altria is projected to deliver solid earnings growth of 6.3% in 2025 and 2.3% in 2026, despite modest adjustments [18]