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Philip Morris drives record smoke-free profit with IQOS, ZYN and VEEV leading shipment growth.
Altria's valuation and steady earnings position it as the stronger 2025 pick.
Altria Group, Inc. ((MO - Free Report) ) and Philip Morris International Inc. ((PM - Free Report) ) are two titans of the global tobacco industry, each charting a distinct path within a rapidly transforming market. MO, deeply rooted in the United States, continues to derive strong revenues from its iconic Marlboro brand while expanding into smoke-free alternatives. Philip Morris, operating predominantly outside the United States, has taken a leading role in the international shift toward reduced-risk products, spearheaded by its IQOS heated tobacco system and ZYN nicotine pouches.
The tobacco industry itself is evolving amid declining cigarette consumption, tighter regulations and growing demand for cleaner nicotine delivery systems. Both companies are leveraging innovation and strategic investments to secure relevance in a smoke-free future. Yet, as investors weigh value versus growth, the question remains — which company is better positioned to dominate the next era of the tobacco industry?
One-Year Price Performance
Image Source: Zacks Investment Research
The Case for Altria
Altria’s strong pricing power continues to be a cornerstone of its financial resilience, helping offset ongoing declines in cigarette volumes. In the second quarter of 2025, net price realization of 10% in the smokeable products segment fueled a 4.2% rise in adjusted operating companies income (“OCI”), while segment margins expanded 290 basis points to 64.5%. This performance underscores Altria’s ability to protect profitability even as cigarette consumption faces structural pressures.
The oral tobacco segment remains a standout growth driver, powered by the success of the on! nicotine pouch brand. Shipments of on! surged 26.5% year over year to 52.1 million cans, lifting its U.S. retail share to 8.7%. Robust demand and favorable pricing contributed to a 10.9% increase in adjusted OCI and a 310-basis-point margin expansion to 68.7%. These results reinforce Altria’s progress in transitioning toward smoke-free revenue streams.
Earnings performance also reflected steady momentum and disciplined execution. Adjusted earnings per share (EPS) climbed 8.3% year over year to $1.44 in the second quarter, supported by higher pricing, cost efficiencies and fewer shares outstanding. Revenues net of excise taxes held firm at $5.29 billion, underscoring portfolio stability. Management subsequently raised the lower end of its full-year 2025 adjusted EPS guidance to $5.35-$5.45, implying growth of 3% to 5%.
Marlboro remains the cornerstone of Altria’s market strength, maintaining a 59.5% share in the premium category. This enduring dominance, coupled with strong smokeable margins and expanding smoke-free offerings, highlights the company’s balanced approach to navigating a shifting tobacco landscape. Altria’s combination of pricing power, brand equity and diversification positions it well to sustain earnings growth while advancing the long-term smoke-free vision.
The Case for Philip Morris
Philip Morris’ growth remains anchored in the smoke-free transformation, which continues to reshape its earnings base. In the third quarter of 2025, smoke-free products contributed 41% of total net revenues and 42% of gross profit. Shipments grew 16.6% year over year, led by IQOS, ZYN and VEEV, driving record quarterly smoke-free gross profit above $3.1 billion and reinforcing long-term profitability.
IQOS, ZYN and VEEV delivered robust, broad-based growth across key markets. IQOS shipments surged 15.5% to 41 billion units in the third quarter, maintaining PM’s 76% global share in heated tobacco units. ZYN shipments increased 37% in the United States to 205 million cans and more than 100% internationally (excluding Nordic countries). VEEV volumes more than doubled on a year-to-date basis, maintaining its #1 closed-pod position in eight markets.
Operational excellence and cost discipline further supported strong earnings momentum. Adjusted operating income rose 12.4% to $4.7 billion, with margins expanding 120 basis points to 43.1%. Adjusted EPS increased 17.3% to $2.24, driven by strong IQOS and ZYN results, resilient combustibles and a favorable tax rate. PM remains on track to deliver $2 billion in cost savings by 2026 and raised full-year EPS guidance to 13.5-15.1% growth.
Nonetheless, pressure persists in the combustible business. Cigarette shipment volumes declined 3.2% in the third quarter, offset partly by high-single-digit pricing that lifted net revenues 4.3%. Gross profit rose 7.7%, showing resilience, but structural declines in smoking rates and regulatory challenges continue to weigh on the category. Sustained innovation in smoke-free products remains vital to offset these long-term headwinds.
How Does the Zacks Consensus Estimate Compare for PM & MO?
The Zacks Consensus Estimate for Altria’s 2025 and 2026 EPS has remained unchanged at $5.43 and $5.57, respectively, over the past 30 days.
Image Source: Zacks Investment Research
The EPS estimate for Philip Morris for 2025 and 2026 has moved down 2 cents to $7.50 and 5 cents to $8.36, respectively, during this time.
Image Source: Zacks Investment Research
Price Performance of PM & MO
Altria is trading at a forward 12-month price-to-earnings (P/E) ratio of 11.41, above its one-year median of 10.81. Meanwhile, Philip Morris’ forward P/E ratio stands at 18.24, below its median of 20.59.
Image Source: Zacks Investment Research
Altria stock has gained 25.3% over the past year, trailing the industry’s 27.3% growth but outperforming Philip Morris, up 13.1%, and the broader S&P 500’s 20.6% rise.
Bottom Line: MO Is the Better Bet
Both Altria and Philip Morris remain dominant players in a rapidly evolving tobacco landscape, but their investment appeal differs. Philip Morris offers stronger global growth and leadership in reduced-risk products, while Altria delivers compelling value through higher yield and steady earnings. With its attractive valuation, robust pricing power and growing smoke-free momentum, Altria stands out as the better bet for income-focused investors seeking stability and consistent returns in 2025, even as the industry continues its transition toward a smoke-free future.
Image: Bigstock
MO vs. PM: The Ultimate Face-Off in a Changing Tobacco Landscape
Key Takeaways
Altria Group, Inc. ((MO - Free Report) ) and Philip Morris International Inc. ((PM - Free Report) ) are two titans of the global tobacco industry, each charting a distinct path within a rapidly transforming market. MO, deeply rooted in the United States, continues to derive strong revenues from its iconic Marlboro brand while expanding into smoke-free alternatives. Philip Morris, operating predominantly outside the United States, has taken a leading role in the international shift toward reduced-risk products, spearheaded by its IQOS heated tobacco system and ZYN nicotine pouches.
The tobacco industry itself is evolving amid declining cigarette consumption, tighter regulations and growing demand for cleaner nicotine delivery systems. Both companies are leveraging innovation and strategic investments to secure relevance in a smoke-free future. Yet, as investors weigh value versus growth, the question remains — which company is better positioned to dominate the next era of the tobacco industry?
One-Year Price Performance
Image Source: Zacks Investment Research
The Case for Altria
Altria’s strong pricing power continues to be a cornerstone of its financial resilience, helping offset ongoing declines in cigarette volumes. In the second quarter of 2025, net price realization of 10% in the smokeable products segment fueled a 4.2% rise in adjusted operating companies income (“OCI”), while segment margins expanded 290 basis points to 64.5%. This performance underscores Altria’s ability to protect profitability even as cigarette consumption faces structural pressures.
The oral tobacco segment remains a standout growth driver, powered by the success of the on! nicotine pouch brand. Shipments of on! surged 26.5% year over year to 52.1 million cans, lifting its U.S. retail share to 8.7%. Robust demand and favorable pricing contributed to a 10.9% increase in adjusted OCI and a 310-basis-point margin expansion to 68.7%. These results reinforce Altria’s progress in transitioning toward smoke-free revenue streams.
Earnings performance also reflected steady momentum and disciplined execution. Adjusted earnings per share (EPS) climbed 8.3% year over year to $1.44 in the second quarter, supported by higher pricing, cost efficiencies and fewer shares outstanding. Revenues net of excise taxes held firm at $5.29 billion, underscoring portfolio stability. Management subsequently raised the lower end of its full-year 2025 adjusted EPS guidance to $5.35-$5.45, implying growth of 3% to 5%.
Marlboro remains the cornerstone of Altria’s market strength, maintaining a 59.5% share in the premium category. This enduring dominance, coupled with strong smokeable margins and expanding smoke-free offerings, highlights the company’s balanced approach to navigating a shifting tobacco landscape. Altria’s combination of pricing power, brand equity and diversification positions it well to sustain earnings growth while advancing the long-term smoke-free vision.
The Case for Philip Morris
Philip Morris’ growth remains anchored in the smoke-free transformation, which continues to reshape its earnings base. In the third quarter of 2025, smoke-free products contributed 41% of total net revenues and 42% of gross profit. Shipments grew 16.6% year over year, led by IQOS, ZYN and VEEV, driving record quarterly smoke-free gross profit above $3.1 billion and reinforcing long-term profitability.
IQOS, ZYN and VEEV delivered robust, broad-based growth across key markets. IQOS shipments surged 15.5% to 41 billion units in the third quarter, maintaining PM’s 76% global share in heated tobacco units. ZYN shipments increased 37% in the United States to 205 million cans and more than 100% internationally (excluding Nordic countries). VEEV volumes more than doubled on a year-to-date basis, maintaining its #1 closed-pod position in eight markets.
Operational excellence and cost discipline further supported strong earnings momentum. Adjusted operating income rose 12.4% to $4.7 billion, with margins expanding 120 basis points to 43.1%. Adjusted EPS increased 17.3% to $2.24, driven by strong IQOS and ZYN results, resilient combustibles and a favorable tax rate. PM remains on track to deliver $2 billion in cost savings by 2026 and raised full-year EPS guidance to 13.5-15.1% growth.
Nonetheless, pressure persists in the combustible business. Cigarette shipment volumes declined 3.2% in the third quarter, offset partly by high-single-digit pricing that lifted net revenues 4.3%. Gross profit rose 7.7%, showing resilience, but structural declines in smoking rates and regulatory challenges continue to weigh on the category. Sustained innovation in smoke-free products remains vital to offset these long-term headwinds.
How Does the Zacks Consensus Estimate Compare for PM & MO?
The Zacks Consensus Estimate for Altria’s 2025 and 2026 EPS has remained unchanged at $5.43 and $5.57, respectively, over the past 30 days.
Image Source: Zacks Investment Research
The EPS estimate for Philip Morris for 2025 and 2026 has moved down 2 cents to $7.50 and 5 cents to $8.36, respectively, during this time.
Image Source: Zacks Investment Research
Price Performance of PM & MO
Altria is trading at a forward 12-month price-to-earnings (P/E) ratio of 11.41, above its one-year median of 10.81. Meanwhile, Philip Morris’ forward P/E ratio stands at 18.24, below its median of 20.59.
Image Source: Zacks Investment Research
Altria stock has gained 25.3% over the past year, trailing the industry’s 27.3% growth but outperforming Philip Morris, up 13.1%, and the broader S&P 500’s 20.6% rise.
Bottom Line: MO Is the Better Bet
Both Altria and Philip Morris remain dominant players in a rapidly evolving tobacco landscape, but their investment appeal differs. Philip Morris offers stronger global growth and leadership in reduced-risk products, while Altria delivers compelling value through higher yield and steady earnings. With its attractive valuation, robust pricing power and growing smoke-free momentum, Altria stands out as the better bet for income-focused investors seeking stability and consistent returns in 2025, even as the industry continues its transition toward a smoke-free future.
MO currently has a Zacks Rank #2 (Buy), while PM carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.