Key Takeaways Altria's on! reached 8.7% U.S. oral tobacco share, up 0.7 points from the prior year.The brand's 26.5% shipment jump to 52.1M cans drove segment profit growth.Helix drives on!'s growth through event marketing and rising brand awareness.Altria Group, Inc.’s ((MO) investment in the smoke-free future is anchored by its on! nicotine pouches, which were the primary driver of growth in the oral tobacco products segment for the second quarter of 2025. The brand’s strong performance pushed its retail ...

Core Insights - Altria Group, Inc. reported Q2 revenue and profit exceeding analysts' expectations, primarily driven by strong demand for its on! nicotine pouches [1][4] - The company is focusing on smoking alternatives to offset declining sales in traditional tobacco products [1][4] Financial Performance - Q2 revenue increased by 1.2%, contrary to analysts' expectations of a 1.8% decline [4] - Profits were reported at $1.44 per share, surpassing the forecast of $1.39 [4] - Sales of on! nicotine pouches surged by 26.5%, while smokeable tobacco shipments fell by 10.2% [4] Future Outlook - Altria anticipates full-year adjusted earnings between $5.35 and $5.45 per share, slightly above the previous estimate of $5.30 to $5.45 [4] - The company highlighted tariffs as a significant factor impacting costs this year [4][5] Market Challenges - NJOY vape sales were suspended due to a patent dispute, leading to a notable loss in the vape division [2][3] - The market for unregulated disposable vapes, primarily imported from China, has negatively affected US vape and tobacco businesses [3]

Core Insights - Altria Group, Inc. is advancing its smoke-free strategy, but faces significant challenges as domestic cigarette shipments fell 10.2% year over year, with Marlboro's retail share slipping to 41% [1][8] - The company's smoke-free offerings, particularly on! nicotine pouches, showed strong growth with shipments increasing by 26.5% to 52.1 million cans, capturing 8.7% of the U.S. oral tobacco market [2][8] - Despite the growth in smoke-free products, combustibles remain the economic anchor for Altria, generating $2.9 billion in adjusted operating companies income (OCI) with margins at 64.5% [3][8] - The overall performance indicates a company in transition, with cigarettes declining but still profitable, while oral nicotine is expanding from a smaller base [4] Competitive Landscape - Philip Morris International Inc. reported that 41% of its net revenues came from smoke-free products, with an 11.8% increase in shipment volumes, highlighting faster adoption in the reduced-risk category [5] - Turning Point Brands, Inc. experienced a 25% revenue increase to $116.6 million, with modern oral products contributing significantly to sales growth [6] Financial Performance - Altria's shares gained 0.8% over the past month, contrasting with a 3.2% decline in the industry [7] - The company trades at a forward price-to-earnings ratio of 12.01X, lower than the industry average of 14.99X [9] - Zacks Consensus Estimate indicates year-over-year earnings growth of 5.3% for 2025 and 2.9% for 2026 [10]

Core Viewpoint - Altria Group is experiencing rising earnings due to price increases, but is facing significant declines in cigarette volumes, raising concerns about the sustainability of its dividend payouts [1][10]. Financial Performance - In Q2, Altria reported a 1.7% decline in overall revenue net of excise taxes to $5.29 billion, while adjusted EPS increased by 8.3% to $1.44, surpassing analyst expectations [3]. - The oral products segment, which includes on! nicotine pouches, saw a 6% revenue increase to $728 million, with shipment volumes rising 26.5% to 52.1 million cans [4]. - The cigarette business experienced a 10.2% decline in overall shipment volumes, with Marlboro brand shipments down 11.4% and other premium brands down 13% [5]. Dividend Analysis - Altria currently pays a quarterly dividend of $1.02, totaling an annual rate of $4.08, with operating cash flow and free cash flow at $2.9 billion for the first half of the year, while dividends paid amounted to $3.5 billion [8]. - Cash flows are not covering the dividend payout for the first half of the year, which raises concerns, although the company covered $6.8 billion in dividends last year with $8.6 billion in free cash flow [9]. - The company ended the quarter with a debt-to-EBITDA leverage of 2 times, indicating that the dividend appears sustainable in the near term [9]. Market Position and Valuation - Altria's pricing power is strong, but the continuous decline in cigarette volumes poses a risk to future revenue [10]. - The company trades at a forward P/E ratio of 11.5 based on 2025 analyst consensus, which is lower than its former unit, Philip Morris International [11]. - Despite being a solid dividend play, the stock is at a six-year high, and the ongoing volume declines in its core business suggest caution for potential investors [11].

Core Insights - Altria Group reported Q2 2025 results with adjusted earnings and revenue exceeding analyst expectations, driven by price increases and growth in oral tobacco products [1][2] - Adjusted diluted EPS was $1.44, surpassing the estimate of $1.39, and revenue reached $6.10 billion, despite a 1.7% decline year-over-year [1][2] Financial Performance - Adjusted diluted EPS (Non-GAAP) was $1.44, up 8.3% year-over-year, compared to $1.33 in Q2 2024 [2] - Revenue (GAAP) was $6.10 billion, down 1.7% from $6.21 billion in Q2 2024, with smokeable products revenue at $5.36 billion, a 2.5% decline [2][5] - Oral tobacco products revenue increased by 5.9% to $753 million, driven by a 26.5% rise in on! nicotine pouch shipments [2][6] Business Overview and Strategy - Altria is a leading U.S. tobacco company known for Marlboro cigarettes and a range of smoke-free products, focusing on transitioning adult smokers to non-combustible products [3][4] - The company is investing in nicotine pouches and has made acquisitions like NJOY e-vapor to enhance its product offerings [4] Segment Performance - The smokeable products segment faced challenges, with a 10.2% drop in U.S. cigarette shipment volumes, leading to a 2.5% revenue decline [5] - Despite volume declines, the adjusted margin for smokeable products improved by 2.9 percentage points to 64.5% due to price increases and cost control [5] - Oral tobacco products showed growth, but total shipment volume declined by 1.0%, indicating challenges in traditional brands [6] Regulatory and Competitive Environment - The company is navigating a highly regulated environment and is focused on compliance and monitoring the impact of tariffs on its supply chain [8] - NJOY ACE, Altria's main e-vapor device, is currently off the U.S. market due to patent litigation, affecting its momentum in the e-vapor category [7] Capital Deployment and Shareholder Returns - In the first half of 2025, Altria returned $3.5 billion to shareholders through dividends and $600 million through share repurchases [9] - The company has $400 million remaining in its buyback authorization and maintains a focus on operational efficiency [9] Future Guidance - Altria raised its full-year 2025 adjusted diluted EPS guidance to a range of $5.35 to $5.45, projecting up to 5.0% growth [11] - The company continues its consistent dividend program and share repurchases, while monitoring developments in smoke-free product launches and regulatory outlooks [12]

Core Viewpoint - Altria Group, Inc. is set to report its first-quarter 2025 earnings, with expectations of a slight revenue decline but earnings growth compared to the previous year [1][2]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for first-quarter revenues is $4.6 billion, reflecting a 1.7% decline year-over-year [2]. - The earnings estimate has decreased by 2 cents to $1.17 per share, indicating a 1.7% growth from the same quarter last year [2]. - Altria has a trailing four-quarter average negative earnings surprise of 0.2%, but in the last quarter, it exceeded the consensus estimate by 1.6% [2]. Earnings Prediction Model - The current model does not predict a definitive earnings beat for Altria, as it has an Earnings ESP of -2.69% and a Zacks Rank of 3 (Hold) [3][4]. Strategic Focus - Altria's strategic transformation towards smoke-free products is a key focus, with efforts to expand its portfolio of reduced-risk offerings like NJOY e-vapor products and on! nicotine pouches [5]. - The "Optimize & Accelerate" initiative aims to modernize operations and enhance progress towards a smoke-free vision [5]. Performance Influences - Strength in smoke-free products is expected to positively impact first-quarter performance, although significant investments in R&D and marketing may affect profitability [6]. - The Smokeable Products segment remains crucial, contributing 88.1% of total revenues in Q4 2024, but faces challenges from declining cigarette volumes due to macroeconomic factors [7]. Valuation Analysis - Altria shares are trading at a forward 12-month price-to-earnings ratio of 10.99, below the Zacks Tobacco industry average of 14.86, indicating attractive valuation for investors [8]. - Compared to competitors, Altria's valuation is lower than Philip Morris International (P/E of 22.74) and Turning Point Brands (P/E of 16.72), while British American Tobacco trades at a P/E of 9.23 [10]. Stock Performance - Over the past three months, Altria stock has returned 9.8%, underperforming the industry gain of 20.8% but outperforming the S&P 500's decline of 11% [11]. - Altria has shown relative strength compared to peers like Turning Point Brands and British American Tobacco, but Philip Morris has outperformed with a 30.4% gain [11]. Investment Outlook - Altria's attractive valuation, defensive sector positioning, and stable performance make it a compelling choice for long-term investors in the tobacco sector [13].