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Altria's Oral Margins Surge to 68.7%: Can the Strength Last?
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Key Takeaways
Oral segment margins jump to 68.7%, driven by cost control and pricing discipline.
on! nicotine pouches grow 26.5%, offsetting declines in traditional MST brands.
Sustaining margins hinges on competition, pricing and product mix shifts.
Altria Group, Inc.’s ((MO - Free Report) ) oral tobacco business is showing solid profitability, with adjusted operating companies income (“OCI”) margins rising to 68.7% in the second quarter of 2025, up 3.1 percentage points from a year earlier. This surge underscores the segment’s strong cost discipline and favorable pricing, even as total shipment volumes dipped 1%.
The standout driver remains on! nicotine pouches, which posted a 26.5% volume increase and offset weakness in traditional moist smokeless tobacco (“MST”) brands like Copenhagen and Skoal. Strong pricing and cost efficiencies lifted adjusted OCI by 10.9%.
Sustaining the segment’s strong profitability will depend on its product mix. Growth is increasingly driven by on!, which has a different margin profile than traditional MST products. Competition in the nicotine pouch category also remains intense. on!’s share of the pouch segment declined 2.3 percentage points year over year to 16.7%, even as its share of the total U.S. oral tobacco category inched up to 8.7%.
For now, Altria’s oral tobacco business continues to demonstrate strong operating efficiency despite softer shipment trends. The recent margin improvement reflects pricing discipline and cost control. Whether current profitability levels can be maintained over time will depend on future pricing dynamics, competitive pressures and the cost structure of its growing smoke-free portfolio.
How PM & TPB Compare to Altria’s Oral Segment Margins
Philip Morris International Inc. ((PM - Free Report) ) posted an adjusted operating income margin of 41.9% in the second quarter of 2025, reflecting the success of its global pricing and cost management strategies. Strong performance of Philip Morris is notable given the substantial marketing and R&D investments supporting its Smoke-Free Business and leading U.S. nicotine pouch brand, ZYN. These results underscore Philip Morris’ ability to drive profitability while expanding its multi-category platform worldwide.
Turning Point Brands, Inc. ((TPB - Free Report) ) reported a Stoker's products segment adjusted operating income margin of 44.3%, up 250 basis points in the second quarter of 2025, along with a gross margin of 62.5%. Strong performance of Turning Point Brands reflects its manufacturing efficiency and robust pricing power across high-margin consumable products. These results underscore Turning Point Brands’ ability to capitalize on the rapidly expanding modern oral market.
Altria’s Price Performance, Valuation & Estimates
Shares of Altria have gained 2.5% in the past month against the industry’s decline of 1.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 12.02X, down from the industry’s average of 14.68X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MO’s 2025 and 2026 earnings implies year-over-year growth of 6.1% and 2.5%, respectively.
Image: Bigstock
Altria's Oral Margins Surge to 68.7%: Can the Strength Last?
Key Takeaways
Altria Group, Inc.’s ((MO - Free Report) ) oral tobacco business is showing solid profitability, with adjusted operating companies income (“OCI”) margins rising to 68.7% in the second quarter of 2025, up 3.1 percentage points from a year earlier. This surge underscores the segment’s strong cost discipline and favorable pricing, even as total shipment volumes dipped 1%.
The standout driver remains on! nicotine pouches, which posted a 26.5% volume increase and offset weakness in traditional moist smokeless tobacco (“MST”) brands like Copenhagen and Skoal. Strong pricing and cost efficiencies lifted adjusted OCI by 10.9%.
Sustaining the segment’s strong profitability will depend on its product mix. Growth is increasingly driven by on!, which has a different margin profile than traditional MST products. Competition in the nicotine pouch category also remains intense. on!’s share of the pouch segment declined 2.3 percentage points year over year to 16.7%, even as its share of the total U.S. oral tobacco category inched up to 8.7%.
For now, Altria’s oral tobacco business continues to demonstrate strong operating efficiency despite softer shipment trends. The recent margin improvement reflects pricing discipline and cost control. Whether current profitability levels can be maintained over time will depend on future pricing dynamics, competitive pressures and the cost structure of its growing smoke-free portfolio.
How PM & TPB Compare to Altria’s Oral Segment Margins
Philip Morris International Inc. ((PM - Free Report) ) posted an adjusted operating income margin of 41.9% in the second quarter of 2025, reflecting the success of its global pricing and cost management strategies. Strong performance of Philip Morris is notable given the substantial marketing and R&D investments supporting its Smoke-Free Business and leading U.S. nicotine pouch brand, ZYN. These results underscore Philip Morris’ ability to drive profitability while expanding its multi-category platform worldwide.
Turning Point Brands, Inc. ((TPB - Free Report) ) reported a Stoker's products segment adjusted operating income margin of 44.3%, up 250 basis points in the second quarter of 2025, along with a gross margin of 62.5%. Strong performance of Turning Point Brands reflects its manufacturing efficiency and robust pricing power across high-margin consumable products. These results underscore Turning Point Brands’ ability to capitalize on the rapidly expanding modern oral market.
Altria’s Price Performance, Valuation & Estimates
Shares of Altria have gained 2.5% in the past month against the industry’s decline of 1.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 12.02X, down from the industry’s average of 14.68X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MO’s 2025 and 2026 earnings implies year-over-year growth of 6.1% and 2.5%, respectively.
Image Source: Zacks Investment Research
Altria currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.