Which Stock Offers Greater Value: Philip Morris or Altria?
In the tobacco industry, Philip Morris International (PM) is currently stealing the spotlight from Altria (MO) due to its stronger long-term growth prospects. This is primarily due to PM's global presence and aggressive pivot towards smoke-free and reduced-risk products.
PM's 2025 earnings per share (EPS) estimate stands at $7.50, significantly higher than Altria's $5.37, reflecting investor confidence in PM's growth trajectory. While Altria focuses on domestic stability and pricing power amid volume declines, PM benefits from multi-category innovation and expanding international operations.
In Q2 2025, PM recorded robust organic net revenue growth of around 6.8%, driven by international markets and smoke-free product categories. Net revenues rose 15.2% year over year, and gross profit jumped over 23%. This contrasts with Altria's significant domestic cigarette volume declines, partially offset by pricing power.
PM's success in smoke-free and reduced-risk products aligns with industry trends moving away from combustible cigarettes globally. On the other hand, Altria's growth is more challenged by regulatory and macroeconomic headwinds in the U.S.
PM's multi-category innovation and global footprint provide diversification and growth potential, whereas Altria's value appeal stems largely from stable domestic pricing and dividend yield. However, PM's hefty 86% trailing-12-month payout ratio should be noted.
In terms of strategic investments, PM has grown its dividend payout by 176% since 2008 and has increased it for 15 straight years. On the other hand, Altria has raised its dividend 57 times over the prior 53 years, but the current dividend yield is not specified.
PM has set a goal for more than half of its net revenue to come from smoke-free alternatives by 2025, while Altria has halted further investment in Cronos Group due to struggles in the legalized cannabis market. Altria made a $1.8 billion investment for a 45% ownership stake in Cronos Group, but later wrote off most of its Juul investment, after spending $12.8 billion for a 35% economic stake in the vaping company in 2018.
Altria also made a $2.75 billion investment on U.S. vape manufacturer Njoy Holdings, but PM's long-term outlook is considerably more attractive due to its success in smoke-free alternatives. This shift towards smoke-free products, as Wall Street believes, will be an enormous growth driver for Philip Morris, making its stock offer superior overall value to Altria in the current market environment.
[1] Source: Yahoo Finance [2] Source: Seeking Alpha [4] Source: The Motley Fool
- In the financial sector, investors are showing greater confidence in Philip Morris International (PM), as evidenced by its higher EPS estimate for 2025 compared to Altria (MO), indicating a more attractive investment opportunity.
- By focusing on multi-category innovation and expanding international operations, PM is benefiting from diverse growth opportunities not present in Altria's more domestic-centric strategy.
- As PM continues to invest in and succeed with smoke-free and reduced-risk products, it stands to gain substantial growth, making its stock a superior value in the current market environment, according to Wall Street analysts.
