Altria Group, Inc. MO has experienced an upward momentum, rising 5.1% over the past month, outperforming the Zacks Tobacco industry’s growth of just 0.9%. This comes as the Zacks Consumer Staples sectors and the S&P 500 declined 0.4% and 5%, respectively, showcasing MO’s standout performance amid broader market weakness.

MO’s stock has outperformed key competitors in the tobacco industry, including Philip Morris International Inc. PM, which saw a decline of 2.1%, and Turning Point Brands, Inc. TPB, which dropped by 14.4% in the same period. British American Tobacco p.l.c. BTI matched Altria’s performance with a 5.1% gain over the past month.

Altria’s One-Month Price Performance

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As of yesterday, Altria's stock closed at $57.65, just 3.4% below its 52-week high of $59.67, reached on March 10, 2025. The stock currently reflects a 41.8% premium over its 52-week low of $40.65, reached on April 15, 2024. Altria is trading above both its 50-day and 200-day moving averages, signaling bullish sentiment in the market.

MO Stock Trades Above 50-Day & 200-Day Moving Averages

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Given these factors, investors are left with an important question: Should they take profits now or consider further investment opportunities in Altria? Let’s take a closer look.

Decoding Potential Tailwinds Behind Altria’s Growth

Altria is making significant progress in its transition toward a smoke-free future. With a strong focus on harm reduction, regulatory compliance and innovative alternatives for adult smokers, the company is reshaping its role within the tobacco industry. By prioritizing reduced-risk products, Altria is taking the lead in creating a healthier future for its customers while staying agile in response to changing market demands.

A key part of Altria's transformation strategy is NJOY, which is solidifying its position in the highly competitive e-vapor market. In 2024, NJOY successfully expanded its product distribution to over 100,000 stores, securing a prominent retail position. In the fourth quarter, NJOY achieved an impressive 15% increase in consumable shipments, reaching 12.8 million units, highlighting Altria’s ability to establish a strong foothold in the e-vapor market.

Altria also owns on!, a popular tobacco-derived nicotine pouch brand through its subsidiary Helix Innovations. on! saw impressive 44% year-over-year growth in shipment volume during the fourth quarter, reaching nearly 44 million cans, and increased its share of the oral tobacco market to 8.9%.

In line with its smoke-free vision, Altria introduced the "Optimize and Accelerate" initiative, which focused on modernizing operations, leveraging technology and achieving cost savings. In addition, the company’s focus on pricing strength has driven profitability in key segments, demonstrating its resilience in a competitive market. With a commitment to innovation, regulatory collaboration, and operational efficiency, Altria is positioning itself as a leader in the transition to a smoke-free future.

Altria’s Attractive Valuation Relative to Peers

Despite its strong fundamentals, Altria remains undervalued compared with the industry. Trading at a forward 12-month P/E of 10.74X, it lags the industry average of 13.80X. In addition, MO is priced below the broader sector’s 17.30X and the S&P 500’s 20.77X, reinforcing its potential for upside as the company continues to execute its long-term growth strategy. With a Value Score of B, Altria appears attractive from a valuation standpoint.

MO P/E Ratio (Forward 12 Months)

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MO Navigates Growing Obstacles in the Tobacco Industry

Altria’s push into the smoke-free category faces significant challenges as illicit flavored disposable e-vapor products continue to grow rapidly. The company estimates that the e-vapor market expanded by nearly 30% in 2024, with illicit products now accounting for over 60% of the category. These unauthorized products undermine Altria’s efforts in the e-vapor segment, where NJOY is gaining market share but remains overshadowed by these illicit alternatives. This trend not only impacts Altria’s revenue potential in the smoke-free segment but also complicates regulatory enforcement efforts. Despite Altria's proactive engagement with regulators, the increasing presence of unregulated products continues to hinder the market for its compliant offerings, including NJOY and on!.

In addition, Altria’s domestic cigarette shipment volumes declined by 8.8% in the fourth quarter, reflecting broader industry challenges and retail share losses. The decline in the cigarette market is largely due to ongoing discretionary income pressures on Adult Tobacco Consumers and the rise of illegal e-vapor products. This trend highlights the difficulty Altria faces in sustaining growth within its smokable products segment, which remains its core revenue-generating category.

MO Investment Strategy

Altria's stock has shown growth over the past month, outperforming key competitors and the broader market. While the company is making progress in its shift toward a smoke-free future, it faces challenges, particularly the rise of illicit e-vapor products and a decline in domestic cigarette shipments. Despite these obstacles, Altria’s solid fundamentals, including growth in the e-vapor market through NJOY and on!, position the company for long-term success. 

MO appears undervalued compared to its peers, suggesting potential for further upside as the company continues executing its growth strategy. For long-term investors who believe in the company’s transformation, Altria offers an attractive opportunity. Currently, MO carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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