Altria vs. Philip Morris: Which Stock Smokes Out Better Returns?

Altria Group, Inc. (MO) and Philip Morris International Inc. (PM) stand as two of the most recognized names in the global tobacco industry. While Altria primarily operates within the United States, Philip Morris International has built its dominance outside the United States. Both companies are rooted in the manufacture and sale of cigarettes, smokeless tobacco and increasingly, next-generation reduced-risk products aimed at adapting to shifting consumer preferences and regulatory pressures.The tobacco industry itself is undergoing a major transformation, shaped by declining cigarette volumes, rising health awareness and evolving regulatory frameworks. Companies like MO and PM are not only competing on brand strength but also on their ability to innovate through alternatives such as heated tobacco and nicotine pouches.One-Year Price PerformanceImage Source: Zacks Investment ResearchThe Case for AltriaA key driver of Altria’s investment appeal is its resilient earnings growth. In the second quarter of 2025, adjusted earnings per share (EPS) rose 8.3% year over year to $1.44, supported by higher pricing, cost efficiencies and share repurchases. Revenues net of excise taxes held firm at $5.29 billion, reinforcing portfolio stability. Based on the performance, management raised the lower end of its 2025 adjusted EPS guidance to $5.35-$5.45, representing a growth rate of 3% to 5%.Momentum in the oral tobacco segment remains a standout catalyst, led by the on! nicotine pouch brand. Shipments of on! rose 26.5% to 52.1 million cans in the second quarter. on! now holds 8.7% retail share of the total U.S. oral tobacco market, supported by digital marketing and brand activations that improved consumer awareness. This success drove a 10.9% increase in adjusted operating income and a margin expansion of 310 bps to 68.7%, underscoring Altria’s smoke-free growth strategy.Meanwhile, Altria’s smokeable products segment continues to demonstrate resilience, driven by strong pricing and disciplined brand management. The adjusted operating income rose 4.2% in the second quarter, with margins expanding 290 bps to 64.5%. Marlboro maintained its long-standing leadership in the premium category, expanding its share to 59.5% of the segment. This performance highlights the enduring strength of Altria’s flagship brand and ability to defend profitability even in a challenging industry environment.Still, investors must weigh ongoing risks. Domestic cigarette shipments fell 10.2% in the second quarter of 2025, reflecting the broader industry downturn as flavored disposable e-vapor products capture share, compounded by discretionary income pressures on adult tobacco consumers.The Case for Philip MorrisPhilip Morris’ growth story remains firmly anchored in its smoke-free transformation. In the second quarter of 2025, smoke-free products accounted for 41% of total net revenues, improving 15.2% year over year and 14.5% organically, with strong contributions from IQOS, ZYN and VEEV. This segment has become an increasingly important contributor to earnings, positioning PM for sustainable growth and long-term value creation.Despite volume declines, PM’s traditional cigarette business remains resilient, supported by its premium brands and pricing power. Combustible net revenues grew 2.1% in the second quarter, driven by price increases, while the gross profit advanced 5%. Marlboro also reached its highest quarterly market share since the 2008 spin-off, reinforcing PM’s brand strength and pricing leadership.Philip Morris also advanced its cost and productivity initiatives. The company achieved more than $500 million in gross cost savings in the first half of the year through manufacturing and back-office optimization initiatives. The company aims to deliver $2 billion in gross cost efficiencies between 2024 and 2026, and by mid-2025, it has already realized more than $1.2 billion. The margin expansion achieved in the quarter reflects the impacts of these efficiencies.Management recently lifted its full-year adjusted EPS guidance to $7.43-$7.56 (indicating 13-15% growth) from the prior stated $7.36-$7.49 (implying 12-14% growth). This guidance reflects confidence in sustaining double-digit earnings growth, although regulatory and currency challenges persist.However, challenges remain in Philip Morris’ combustible business. Cigarette shipment volumes declined 1.5% year over year to 155.2 billion units in the second quarter, with notable weakness in Turkey and Indonesia. Management foresees a 2% cigarette volume decrease for the full year, with a sharper 3-4% drop in the second half.How Does the Zacks Consensus Estimate Compare for MO & PM?The Zacks Consensus Estimate for Altria’s 2025 EPS has moved up by 2 cents over the last 30 days to $5.39, implying a year-over-year increase of 5.3%. In comparison, the consensus estimate for Philip Morris has remained unchanged at $7.50 during the same period and points to growth of 14.2% for 2025.Price Performance & Valuation of MO & PMAltria stock has advanced 15.2% in the past month, outperforming Philip Morris, which gained 8.9%, and the broader industry’s 11.3% growth, underscoring investor confidence in Altria’s strategy and execution.On the valuation front, Altria trades at a forward P/E multiple of 12.29, attractive for yield-focused investors, while Philip Morris carries a premium 21.25 multiple, backed by its global scale and smoke-free momentum.Image Source: Zacks Investment ResearchBottom Line: PM Is the Better BetWhile both Altria and Philip Morris offer compelling cases, the balance tilts in favor of Philip Morris as the stronger long-term investment. Its global scale, leadership in smoke-free innovation and accelerating transformation toward reduced-risk products give it an edge in navigating the tobacco industry’s structural changes. Altria remains attractive for income-oriented investors, but Philip Morris emerges as the better bet for sustained growth and future value creation.MO and PM currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Altria Group, Inc. (MO): Free Stock Analysis Report Philip Morris International Inc. (PM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks