Should You Pick MO Stock At $52?

Altria (NYSE: MO) recently reported its Q4 results, with revenues and earnings slightly ahead of the street estimates. The company reported revenue of $5.11 billion and adjusted earnings of $1.29 per share, compared to the consensus estimates of $5.05 billion and $1.28, respectively. The company continued to benefit from increasing sales of oral tobacco products. However, the company’s outlook for 2025 was below expectations.

MO stock, with 41% returns since the beginning of 2024, has outperformed the S&P 500 index, up 27%. This can be attributed to the company’s decision to reduce its stake in Anheuser-Busch InBev last year and use the proceeds to buy back its own shares. But, if you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

How Did Altria Fare In Q4?

Altria’s revenues of $5.11 billion in Q4 reflected a 1.6% y-o-y growth. Altria continues to benefit from its relatively new smoke-free products, including NJOY and on! Total smokeable products volume declined 8.6% and oral tobacco products volume was down 0.4% during the quarter. NJOY – which includes vaping products and electronic cigarettes – saw a solid 15.3% y-o-y volume growth for consumables and 22.2% jump in volume of devices.

Although Altria saw only a low single-digit sales growth, its adjusted operating margin has improved by 220 bps for its smokeable products and 640 bps for its oral tobacco products in Q4. Higher revenues and margin expansion resulted in the bottom line of $1.29 on an adjusted basis, reflecting a 9.3% y-o-y change.

Looking forward, Altria expects its 2025 adjusted earnings to be $5.30 at the mid-point of the provided range, missing the consensus estimate of $5.35. Furthermore, the company’s management pointed that there’s a rise in illicit vaping products in the market, which is impacting their business. Illicit products now account for 60% of the vaping products market, creating an uneven playing field for Altria’s compliant businesses operating within federal guidelines.

What Does This Mean For MO Stock?

Although Altria posted an upbeat Q4, its stock hasn’t seen any meaningful change lately. But, if we look at a slightly longer time frame, the increase in MO stock over the last four-year period has been far from consistent and has largely been as volatile as the S&P 500. Returns for the stock were 24% in 2021, 4% in 2022, -4% in 2023, and 41% in 2024.

In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last four-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

In light of the uncertain economic landscape, including questions about rate cuts and new tariffs affecting major trading partners (Canada, Mexico, and China), will MO repeat its pattern of underperforming against the S&P 500 as seen in 2021 and 2023, or could we expect a rebound? While we will soon update our model for Altria to reflect the latest results, we think its stock is fairly priced now. At its current levels of $52, MO stock is trading at 10.2x its trailing earnings of $5.12 per share, slightly above the stock’s average P/E ratio of 9.5x over the last five years.

While MO stock looks like it is fully valued, it is helpful to see how Altria’s peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 2/3/2025
[2] Cumulative total returns since the end of 2016

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