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MO vs. PM: Which Tobacco Giant is Better Positioned for the Future?
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Key Takeaways
Altria offsets falling cigarette volumes with pricing power and growth in oral tobacco products.
Philip Morris drives growth with smoke-free products, now 41% of its net revenues in Q2 2025.
PM boosts margins through $500M in cost savings, reinforcing global scale and execution strength.
Altria Group, Inc. ((MO - Free Report) ) and Philip Morris International Inc. ((PM - Free Report) ) are two of the most prominent names in the global tobacco industry. Altria has a market capitalization of approximately $109.5 billion, anchored by its Marlboro brand and a strong U.S.-focused portfolio, including traditional cigarettes and growing smoke-free products.
In comparison, Philip Morris commands a market capitalization of around $255.3 billion. Its growth is driven by a combination of premium combustible brands and an expanding reduced-risk product portfolio, including IQOS, ZYN and VEEV, positioning it as a leader in the evolving tobacco landscape.
Both MO & PM are investing heavily in next-generation products to adapt to declining cigarette volumes and rising demand for smoke-free alternatives. But when it comes to financial strength, growth outlook and risk exposure, which company really has the upper hand? Let’s break down the face-off.
The Case for Altria
Altria’s strong pricing power has been a defining driver of resilience, allowing it to offset persistent declines in cigarette volumes. In the second quarter of 2025, net price realization of 10% in the smokeable products segment supported adjusted operating companies income (OCI) growth of 4.2%, while margins widened by 290 basis points to 64.5%. This highlights the company’s ability to defend profitability in a pressured category.
MO also leveraged pricing strength in its oral tobacco segment, where higher realizations combined with robust consumer demand delivered a 10.9% increase in adjusted OCI. Segment margins expanded 310 basis points to 68.7%, reflecting the success of its on! nicotine pouch brand. Shipments of on! surged 26.5% to 52.1 million cans, lifting its retail share and cementing its position as a growth engine in the smoke-free portfolio.
Altria demonstrated earnings momentum and brand resilience in the second quarter of 2025. Adjusted earnings per share climbed 8.3% year over year to $1.44, supported by strong adjusted OCI growth and share repurchases. Marlboro reinforced its dominance in the premium category with a 59.5% share, showcasing the enduring strength of Altria’s flagship brand.
However, MO continues to grapple with headwinds in its combustible business. Domestic cigarette volumes fell 10.2% in the second quarter of 2025, reflecting ongoing industry declines. Competitive pressure from flavored disposable e-vapor products further compounds this weakness, threatening market share. While pricing strength cushions profitability, persistent volume erosion underscores the long-term vulnerability of Altria’s legacy cigarette franchise.
One-Year Price Performance
Image Source: Zacks Investment Research
The Case for Philip Morris
Philip Morris’ long-term growth story remains anchored in its smoke-free transformation, which continues to reshape the company’s earnings mix. In the second quarter of 2025, smoke-free products accounted for 41% of total net revenues, up 15.2% year over year. With IQOS, ZYN and VEEV fueling this expansion, PM has built a diversified platform that positions it for sustainable growth and value creation.
Philip Morris also benefits from the resilience of its premium combustible brands. Despite ongoing volume declines, combustible net revenues advanced 2.1% in the quarter, driven by strong pricing power. Gross profit increased 5%, reflecting the company’s disciplined brand management and ability to protect margins. This performance underscores PM’s enduring strength in the premium category and its capacity to defend profitability in a mature and highly regulated industry.
Philip Morris has further strengthened its position through disciplined cost and productivity initiatives. The company realized more than $500 million in gross cost savings in the first half of 2025, primarily through manufacturing and back-office optimization. Having already delivered $1.2 billion toward its $2 billion efficiency target for 2024–2026, PM has unlocked meaningful margin expansion, reflecting strong execution and financial discipline.
That said, PM continues to face pressure in traditional cigarettes, particularly in emerging markets. Second-quarter volumes fell 1.5% year over year to 155.2 billion units, weighed down by regulatory changes in Turkey and rising illicit trade in Indonesia. Management projects a full-year cigarette volume decline of 2%, with sharper drops in the second half. These headwinds highlight the persistent risks tied to the combustible portfolio.
MO vs. PM: How Do Estimates Stack Up?
The Zacks Consensus Estimate for Altria’s 2025 EPS has moved up by 2 cents over the last 60 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 indicates growth of 14.2% for 2025.
MO & PM: A Look at Past-Year Stock Performance
Altria stock has gained 27.7% over the past year, underperforming Philip Morris, which has increased by 36%, and the broader industry’s 36.6% growth, reflecting investors’ stronger interest in PM’s global expansion and smoke-free product momentum.
Altria is trading at a forward 12-month price-to-earnings (P/E) ratio of 11.82, above its one-year median of 10.73. Meanwhile, Philip Morris’ forward P/E ratio stands at 20.11, below its median of 20.59.
Image Source: Zacks Investment Research
MO vs. PM: Which Stock Looks More Promising Now?
Among the leading tobacco firms, Philip Morris emerges as the stronger growth story. Its rapid transition to smoke-free products, global scale, and efficiency initiatives have driven both earnings and margin expansion. Altria’s U.S.-focused portfolio remains solid and continues to generate reliable cash flows. For investors prioritizing long-term growth and industry transformation, PM is better positioned, while Altria offers stability and consistent performance.
Image: Bigstock
MO vs. PM: Which Tobacco Giant is Better Positioned for the Future?
Key Takeaways
Altria Group, Inc. ((MO - Free Report) ) and Philip Morris International Inc. ((PM - Free Report) ) are two of the most prominent names in the global tobacco industry. Altria has a market capitalization of approximately $109.5 billion, anchored by its Marlboro brand and a strong U.S.-focused portfolio, including traditional cigarettes and growing smoke-free products.
In comparison, Philip Morris commands a market capitalization of around $255.3 billion. Its growth is driven by a combination of premium combustible brands and an expanding reduced-risk product portfolio, including IQOS, ZYN and VEEV, positioning it as a leader in the evolving tobacco landscape.
Both MO & PM are investing heavily in next-generation products to adapt to declining cigarette volumes and rising demand for smoke-free alternatives. But when it comes to financial strength, growth outlook and risk exposure, which company really has the upper hand? Let’s break down the face-off.
The Case for Altria
Altria’s strong pricing power has been a defining driver of resilience, allowing it to offset persistent declines in cigarette volumes. In the second quarter of 2025, net price realization of 10% in the smokeable products segment supported adjusted operating companies income (OCI) growth of 4.2%, while margins widened by 290 basis points to 64.5%. This highlights the company’s ability to defend profitability in a pressured category.
MO also leveraged pricing strength in its oral tobacco segment, where higher realizations combined with robust consumer demand delivered a 10.9% increase in adjusted OCI. Segment margins expanded 310 basis points to 68.7%, reflecting the success of its on! nicotine pouch brand. Shipments of on! surged 26.5% to 52.1 million cans, lifting its retail share and cementing its position as a growth engine in the smoke-free portfolio.
Altria demonstrated earnings momentum and brand resilience in the second quarter of 2025. Adjusted earnings per share climbed 8.3% year over year to $1.44, supported by strong adjusted OCI growth and share repurchases. Marlboro reinforced its dominance in the premium category with a 59.5% share, showcasing the enduring strength of Altria’s flagship brand.
However, MO continues to grapple with headwinds in its combustible business. Domestic cigarette volumes fell 10.2% in the second quarter of 2025, reflecting ongoing industry declines. Competitive pressure from flavored disposable e-vapor products further compounds this weakness, threatening market share. While pricing strength cushions profitability, persistent volume erosion underscores the long-term vulnerability of Altria’s legacy cigarette franchise.
One-Year Price Performance
Image Source: Zacks Investment Research
The Case for Philip Morris
Philip Morris’ long-term growth story remains anchored in its smoke-free transformation, which continues to reshape the company’s earnings mix. In the second quarter of 2025, smoke-free products accounted for 41% of total net revenues, up 15.2% year over year. With IQOS, ZYN and VEEV fueling this expansion, PM has built a diversified platform that positions it for sustainable growth and value creation.
Philip Morris also benefits from the resilience of its premium combustible brands. Despite ongoing volume declines, combustible net revenues advanced 2.1% in the quarter, driven by strong pricing power. Gross profit increased 5%, reflecting the company’s disciplined brand management and ability to protect margins. This performance underscores PM’s enduring strength in the premium category and its capacity to defend profitability in a mature and highly regulated industry.
Philip Morris has further strengthened its position through disciplined cost and productivity initiatives. The company realized more than $500 million in gross cost savings in the first half of 2025, primarily through manufacturing and back-office optimization. Having already delivered $1.2 billion toward its $2 billion efficiency target for 2024–2026, PM has unlocked meaningful margin expansion, reflecting strong execution and financial discipline.
That said, PM continues to face pressure in traditional cigarettes, particularly in emerging markets. Second-quarter volumes fell 1.5% year over year to 155.2 billion units, weighed down by regulatory changes in Turkey and rising illicit trade in Indonesia. Management projects a full-year cigarette volume decline of 2%, with sharper drops in the second half. These headwinds highlight the persistent risks tied to the combustible portfolio.
MO vs. PM: How Do Estimates Stack Up?
The Zacks Consensus Estimate for Altria’s 2025 EPS has moved up by 2 cents over the last 60 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 indicates growth of 14.2% for 2025.
MO & PM: A Look at Past-Year Stock Performance
Altria stock has gained 27.7% over the past year, underperforming Philip Morris, which has increased by 36%, and the broader industry’s 36.6% growth, reflecting investors’ stronger interest in PM’s global expansion and smoke-free product momentum.
Altria is trading at a forward 12-month price-to-earnings (P/E) ratio of 11.82, above its one-year median of 10.73. Meanwhile, Philip Morris’ forward P/E ratio stands at 20.11, below its median of 20.59.
Image Source: Zacks Investment Research
MO vs. PM: Which Stock Looks More Promising Now?
Among the leading tobacco firms, Philip Morris emerges as the stronger growth story. Its rapid transition to smoke-free products, global scale, and efficiency initiatives have driven both earnings and margin expansion. Altria’s U.S.-focused portfolio remains solid and continues to generate reliable cash flows. For investors prioritizing long-term growth and industry transformation, PM is better positioned, while Altria offers stability and consistent performance.
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.