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MO Optimize & Accelerate Initiative: Enough to Boost Long-Term EPS?
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Key Takeaways
Savings are reinvested to drive long-term growth, not just short-term profits.
Smoke-free products like on! show strong volume growth and margin gains.
Long-term EPS impact depends on execution across smoke-free and traditional segments.
Altria Group, Inc.’s ((MO - Free Report) ) long-term earnings story is not just about cutting costs, it is about how smartly those savings are put to work. Under its Optimize & Accelerate initiative, the company is reshaping the cost base and using the savings to fuel growth. Management’s 2025 adjusted earnings per share guidance of $5.35 to $5.45 indicates 3% to 5% growth from last year, already factors in the reinvestment of savings from this program. In other words, Altria is prioritizing its next phase of growth over a short-term boost to profits.
The company stated the initiative is designed to deliver efficiencies that will be reinvested to advance its Vision — the transition to a smoke-free future. The savings are being directed to marketplace activities for smoke-free products and to research, development and regulatory preparation supporting its next-generation portfolio. Charges associated with the initiative are excluded from adjusted earnings per share guidance, allowing results to better reflect underlying operations.
Early signs of progress are emerging. In the second quarter of 2025, despite “2025 Initiative costs,” Altria’s smokeable products segment margin rose to 64.5%, implying that efficiency efforts are starting to take hold. The company’s on! nicotine pouch shipments climbed 26.5%, reinforcing growth in the oral category.
Going forward, the initiative’s contribution to long-term earnings will depend on how effectively Altria converts these reinvestments into lasting cost efficiencies and balanced growth across its smoke-free and traditional businesses.
MO Peers Highlight Success in Smoke-Free & Oral Growth
Philip Morris International Inc. ((PM - Free Report) ) continues to drive earnings-per-share growth through sustained investment in its profitable smoke-free portfolio. The third quarter of 2025 results of Philip Morris show this strategy working, with smoke-free products driving positive total volume and impressive margin expansion. The dedicated focus on its leading heated tobacco and oral nicotine products has delivered record smoke-free gross profit, leading the company to upgrade its full-year adjusted earnings per share forecast. This demonstrates that for Philip Morris, strategic investment is a proven model for exceeding industry-leading growth targets.
Turning Point Brands, Inc. ((TPB - Free Report) ) is rapidly expanding in the modern oral category, with second-quarter 2025 sales soaring 651% year over year to $30.1 million, now over a quarter of total revenues. This growth boosted adjusted EBITDA nearly 14.8% and led management to raise full-year guidance. Strong segment margins and disciplined cost control highlight the success of Turning Point Brands’ investment-led transformation. By growing next-generation oral nicotine products while supporting legacy brands like Stoker’s and Zig-Zag, Turning Point Brands is poised for sustained earnings expansion.
Altria’s Price Performance, Valuation & Estimates
Shares of Altria have lost 1.8% in the past month compared with the industry’s decline of 5.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 11.5X, down from the industry’s average of 14.06X.
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 2.6%, respectively.
Image: Bigstock
MO Optimize & Accelerate Initiative: Enough to Boost Long-Term EPS?
Key Takeaways
Altria Group, Inc.’s ((MO - Free Report) ) long-term earnings story is not just about cutting costs, it is about how smartly those savings are put to work. Under its Optimize & Accelerate initiative, the company is reshaping the cost base and using the savings to fuel growth. Management’s 2025 adjusted earnings per share guidance of $5.35 to $5.45 indicates 3% to 5% growth from last year, already factors in the reinvestment of savings from this program. In other words, Altria is prioritizing its next phase of growth over a short-term boost to profits.
The company stated the initiative is designed to deliver efficiencies that will be reinvested to advance its Vision — the transition to a smoke-free future. The savings are being directed to marketplace activities for smoke-free products and to research, development and regulatory preparation supporting its next-generation portfolio. Charges associated with the initiative are excluded from adjusted earnings per share guidance, allowing results to better reflect underlying operations.
Early signs of progress are emerging. In the second quarter of 2025, despite “2025 Initiative costs,” Altria’s smokeable products segment margin rose to 64.5%, implying that efficiency efforts are starting to take hold. The company’s on! nicotine pouch shipments climbed 26.5%, reinforcing growth in the oral category.
Going forward, the initiative’s contribution to long-term earnings will depend on how effectively Altria converts these reinvestments into lasting cost efficiencies and balanced growth across its smoke-free and traditional businesses.
MO Peers Highlight Success in Smoke-Free & Oral Growth
Philip Morris International Inc. ((PM - Free Report) ) continues to drive earnings-per-share growth through sustained investment in its profitable smoke-free portfolio. The third quarter of 2025 results of Philip Morris show this strategy working, with smoke-free products driving positive total volume and impressive margin expansion. The dedicated focus on its leading heated tobacco and oral nicotine products has delivered record smoke-free gross profit, leading the company to upgrade its full-year adjusted earnings per share forecast. This demonstrates that for Philip Morris, strategic investment is a proven model for exceeding industry-leading growth targets.
Turning Point Brands, Inc. ((TPB - Free Report) ) is rapidly expanding in the modern oral category, with second-quarter 2025 sales soaring 651% year over year to $30.1 million, now over a quarter of total revenues. This growth boosted adjusted EBITDA nearly 14.8% and led management to raise full-year guidance. Strong segment margins and disciplined cost control highlight the success of Turning Point Brands’ investment-led transformation. By growing next-generation oral nicotine products while supporting legacy brands like Stoker’s and Zig-Zag, Turning Point Brands is poised for sustained earnings expansion.
Altria’s Price Performance, Valuation & Estimates
Shares of Altria have lost 1.8% in the past month compared with the industry’s decline of 5.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 11.5X, down from the industry’s average of 14.06X.
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 2.6%, 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.