CHONGQING, CHINA – JANUARY 22: In this photo illustration, a smartphone displays the logo of Altria Group, Inc. (NYSE: MO), a U.S.-based tobacco company and owner of major cigarette brands, in front of a screen showing the company’s stock market chart on January 22, 2026, in Chongqing, China. (Photo illustration by Cheng Xin/Getty Images)
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Altria stock (NYSE: MO) dropped 5% after a Q4 earnings miss. Although revenue (excluding excise taxes) surpassed expectations at $5.08 billion compared to the $5.02 billion estimate, the adjusted EPS of $1.30 fell short of the $1.32 consensus. The stock experienced a sell-off because investors recognize that earnings quality is more important than revenue surprises in the tobacco sector. Additionally, the company reported considerable market share losses in its oral tobacco division.
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What’s the margin story here? The GAAP operating margin plummeted from 56.4% in Q4 2024 to 30% in Q4 2025, mainly due to a $1.3 billion non-cash impairment charge related to its e-vapor business. The company is investing heavily in the development of smoke-free products while facing rising costs throughout the organization. On an adjusted basis, the operating margin was 60.4%, down 80 bps year-over-year.
For a mature tobacco company, margin is crucial. Altria’s business model relies on pricing power to counterbalance volume declines in combustibles. The company reported $20.91 billion in trailing twelve-month revenue—essentially unchanged from three years prior. An annualized volume growth of 2.8% over five years is sluggish. This is not a growth narrative; it’s a cash generation story. When margins are compressed to this extent, the overall thesis comes into question.
What about the 2026 guidance? The full-year adjusted EPS guidance of $5.56-$5.72 (midpoint $5.64) signifies only a 2.5-5.5% growth from 2025’s $5.42. This barely matches inflation rates. The company anticipates growth weighted towards the second half, propelled by increased cigarette import/export activities. However, here lies the assumption risk: guidance presumes limited impact from illicit enforcement measures and that NJOY ACE will not return to the market in 2026.
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So, is Altria stock expensive? Not exactly. In fact, the valuation appears appealing on paper. Priced around $60 per share, Altria trades at merely 11x trailing earnings with a 7.2% dividend yield. The company returned $8 billion to shareholders in 2025 through dividends and share buybacks. It repurchased 17.1 million shares at an average price of $58.50, using $1 billion of its $2 billion authorization. Another $1 billion is available for 2026. For the complete ranking, visit Buybacks & Dividends Ranking.
Currently, the 11x multiple is significantly lower than the stock’s last five-year average of 16x. There are also several positives on the horizon. The transition to smoke-free products is the real story. FDA authorization of six on! PLUS nicotine pouch products was a regulatory triumph, broadening the legal product lineup. The company distributed Proper Wild energy products to over 25,000 stores in 2025. Nevertheless, smoke-free products still contribute minimally to revenue and earnings, with the core Marlboro cigarette business being the predominant financial driver. Although we are revising our $58 price estimate to reflect the latest earnings, we foresee limited upside. Recent challenges warrant a more cautious valuation multiple at this point.
What’s the competitive position? Altria maintains the largest U.S. cigarette market share via Marlboro but confronts structural challenges. Cigarette volumes have dropped 6% annually in the U.S. market from 2019 to 2024—outpacing the global 1% decline. The company enjoys pricing power within a mature market, yet volume erosion is accelerating. The on! pouch market is expanding, but from a minuscule base and faces fierce competition.
Here’s what matters for investors: Are you comfortable owning a declining business that offers you over 7% annually while it shrinks? That’s the Altria proposition. The stock is valued at 11x earnings with a significant yield, but earnings growth is minimal. The transition to smoke-free products is progressing too slowly to offset declines in combustible product sales. The leadership transition (with CEO Billy Gifford retiring in May 2026 and Sal Mancuso taking over) adds a degree of uncertainty.
The value proposition is evident—collect a substantial dividend while hoping that smoke-free products eventually catalyze growth. For income investors who can cope with a gradual decline, the 7%+ yield offers compensation. For growth investors, there’s little to attract attention aside from minor undervaluation.
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