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Altria sees over 60% of the U.S. e-vapor market controlled by unauthorized disposable products.
MO's smoke-free growth faces pressure from illicit competition and softening cigarette volumes.
MO trades at 10.96X forward P/E vs. 15.74X industry average, with 5.3% 2025 EPS growth forecast.
Altria Group, Inc. (MO - Free Report) is facing growing challenges as it shifts its focus toward smoke-free alternatives. The company's efforts are being threatened by the rapid rise of illicit flavored disposable e-vapor products — a trend that is reshaping the U.S. nicotine market.
On its first-quarter 2025 earnings call, Altria highlighted that the adult e-vapor user base in the United States has surpassed 20 million, marking a year-over-year increase of more than 2.6 million users. Notably, disposable e-vapor products drove much of this growth, gaining nearly 4 million new users to reach around 14 million. However, Altria estimates that more than 60% of this expanding market is now controlled by unauthorized, non-compliant products.
The surge in illicit e-vapors is a major headwind for the company’s smoke-free revenue growth. Despite Altria’s increasing market presence in the smoke-free space, illegal competition is dampening its progress. This also hinders broader regulatory goals, such as reducing underage access and promoting harm-reduction alternatives to combustible cigarettes.
Altria continues to collaborate with regulators to address enforcement gaps. However, the persistent availability of illicit products remains a significant barrier. At the same time, cigarette shipment volumes are under pressure due to inflation and evolving consumer behaviors.
As regulatory uncertainty clouds the future of the e-vapor category, investors are watching closely. Can Altria achieve long-term growth in a smoke-free market dominated by illegal players? The answer may depend on regulatory action, product innovation and shifting adult tobacco consumer trends.
MO’s Competition in the Smoke-Free Category
Similar to Altria, major tobacco companies such as Philip Morris International Inc. (PM - Free Report) and British American Tobacco p.l.c. (BTI - Free Report) are also accelerating their transition toward smoke-free alternatives. These industry leaders are actively investing in reduced-risk products (RRPs) to meet changing consumer preferences and adapt to evolving regulatory landscapes.
Philip Morris is accelerating its shift toward RRPs, with smoke-free offerings contributing 44% of first-quarter 2025 gross profit. Driven by IQOS, ZYN and VEEV, it saw strong volume growth, a 20.4% rise in net revenues and a 33.1% increase in smoke-free gross profit. With products in 95 markets and 38.6 million users, Philip Morris is advancing toward a smoke-free future.
British American Tobacco is reshaping its business around RRPs, targeting 50 million consumers by 2030 and 50% revenue contribution by 2035. In 2024, its smokeless user base reached 29.1 million, with New Category revenues up 2.5%. British American Tobacco’s flagship brands — Vuse, glo and Velo — have collectively driven over £3 billion in revenues, reflecting its progress toward a smoke-free future.
MO’s Price Performance, Valuation & Estimates
Shares of Altria have gained 14.4% year to date compared with the industry’s growth of 40.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 10.96X, below the industry’s average of 15.74X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MO’s 2025 earnings implies year-over-year growth of 5.3%, whereas its 2026 earnings estimate suggests a year-over-year uptick of almost 3%.
Image: Bigstock
Illicit E-Vapors Cloud Altira's Smoke-Free Ambitions: What's Next?
Key Takeaways
Altria Group, Inc. (MO - Free Report) is facing growing challenges as it shifts its focus toward smoke-free alternatives. The company's efforts are being threatened by the rapid rise of illicit flavored disposable e-vapor products — a trend that is reshaping the U.S. nicotine market.
On its first-quarter 2025 earnings call, Altria highlighted that the adult e-vapor user base in the United States has surpassed 20 million, marking a year-over-year increase of more than 2.6 million users. Notably, disposable e-vapor products drove much of this growth, gaining nearly 4 million new users to reach around 14 million. However, Altria estimates that more than 60% of this expanding market is now controlled by unauthorized, non-compliant products.
The surge in illicit e-vapors is a major headwind for the company’s smoke-free revenue growth. Despite Altria’s increasing market presence in the smoke-free space, illegal competition is dampening its progress. This also hinders broader regulatory goals, such as reducing underage access and promoting harm-reduction alternatives to combustible cigarettes.
Altria continues to collaborate with regulators to address enforcement gaps. However, the persistent availability of illicit products remains a significant barrier. At the same time, cigarette shipment volumes are under pressure due to inflation and evolving consumer behaviors.
As regulatory uncertainty clouds the future of the e-vapor category, investors are watching closely. Can Altria achieve long-term growth in a smoke-free market dominated by illegal players? The answer may depend on regulatory action, product innovation and shifting adult tobacco consumer trends.
MO’s Competition in the Smoke-Free Category
Similar to Altria, major tobacco companies such as Philip Morris International Inc. (PM - Free Report) and British American Tobacco p.l.c. (BTI - Free Report) are also accelerating their transition toward smoke-free alternatives. These industry leaders are actively investing in reduced-risk products (RRPs) to meet changing consumer preferences and adapt to evolving regulatory landscapes.
Philip Morris is accelerating its shift toward RRPs, with smoke-free offerings contributing 44% of first-quarter 2025 gross profit. Driven by IQOS, ZYN and VEEV, it saw strong volume growth, a 20.4% rise in net revenues and a 33.1% increase in smoke-free gross profit. With products in 95 markets and 38.6 million users, Philip Morris is advancing toward a smoke-free future.
British American Tobacco is reshaping its business around RRPs, targeting 50 million consumers by 2030 and 50% revenue contribution by 2035. In 2024, its smokeless user base reached 29.1 million, with New Category revenues up 2.5%. British American Tobacco’s flagship brands — Vuse, glo and Velo — have collectively driven over £3 billion in revenues, reflecting its progress toward a smoke-free future.
MO’s Price Performance, Valuation & Estimates
Shares of Altria have gained 14.4% year to date compared with the industry’s growth of 40.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 10.96X, below the industry’s average of 15.74X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MO’s 2025 earnings implies year-over-year growth of 5.3%, whereas its 2026 earnings estimate suggests a year-over-year uptick of almost 3%.
Image Source: Zacks Investment Research
MO stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.