Altria Stock Falls 8.2% in Three Months: What Should Investors Do?

Altria Group, Inc. (MO), a prominent name in the tobacco and vaping space, has faced notable pressure in recent months, with its shares declining 8.2% over the past three months. This drop stands in stark contrast to the broader market’s strength, as the Zacks Tobacco industry advanced 1.7%, the Zacks Consumer Staples sector gained 1.2% and the S&P 500 rallied 6.4% over the same period.

Altria has significantly underperformed its key competitors. Turning Point Brands, Inc. (TPB) surged 22.6%, British American Tobacco p.l.c. (BTI) climbed 11% and Philip Morris International Inc. (PM) delivered a 4.5% gain over the past three months.

MO Stock Past 3 Months Performance

This divergence in performance has left investors debating whether Altria’s recent weakness signals deeper structural challenges or represents a temporary setback. Let’s take a closer look at the key factors influencing the stock and what they may mean for prospective investors.

Understanding the Decline of MO Stock

Altria’s recent stock weakness partly reflects continued volume pressure in its core smokeable products business. Domestic cigarette shipment volumes declined 8.2% in the third quarter and fell 10.6% over the first nine months of 2025, exceeding the overall industry’s rate of decline. Although pricing actions and cost controls have supported earnings, the persistent erosion in cigarette consumption remains a structural challenge and continues to weigh on investor sentiment.

Competitive intensity within Altria’s smoke-free portfolio has also weighed on sentiment. The oral nicotine pouch category has seen elevated promotional activity from rivals, pressuring pricing and creating shipment volatility tied to trade inventory movements. Although on! has shown relatively steady retail demand, the tougher competitive environment has raised concerns about near-term growth visibility and whether margins can be maintained as the category evolves.

Regulatory and legal uncertainties further complicate Altria’s outlook, particularly in the e-vapor segment. While recent enforcement actions offer some encouragement, the absence of clear, timely regulatory decisions and prolonged legal processes continues to restrain investor confidence.

Altria’s Strong Fundamentals Offer Stability

Despite industry headwinds, Altria continues to demonstrate resilience through strong earnings execution and margin discipline. In the third quarter of 2025, adjusted earnings per share (EPS) rose 3.6% to $1.45, while year-to-date EPS increased 5.9%, driven by higher adjusted operating companies income (“OCI”) and a lower share count. The smokeable products segment maintained impressive adjusted OCI margins of 64.4%. This ability to sustain profitability amid declining volumes reinforces Altria’s reputation as a dependable cash-generating business.

Progress in Altria’s smoke-free portfolio also provides longer-term stability. The on! nicotine pouch brand continues to post solid retail performance, while on! PLUS has entered select U.S. markets, enhancing the company’s premium offerings. Meanwhile, regulatory filings for the Ploom heated tobacco platform represent another strategic step toward diversifying beyond traditional combustibles and supporting growth initiatives.

Potential for Recovery: A Look at Altria’s Undervaluation

Altria is trading at one of the most attractive valuations in the tobacco space, with a forward 12-month price-to-earnings (P/E) ratio of 10.52. This is below the industry’s average of 14.37, the sector’s 16.38 and the S&P 500’s 23.45. Even compared with major peers, Philip Morris, Turning Point Brands and British American Tobacco, which trade at 19.71, 26.23 and 11.56, respectively, MO remains discounted.

MO P/E Ratio (Forward 12 Months)

How Are Estimates Stacking Up for MO?

The Zacks Consensus Estimate for Altria’s earnings has seen mixed revisions in recent weeks, reflecting a balanced but steady outlook. Over the past 60 days, the EPS estimate for 2025 has inched up 1 cent to $5.44, while the same for 2026 has dipped 1 cent to $5.56. Even with these modest adjustments, Altria is still projected to deliver solid earnings growth, up 6.3% in 2025 and 2.3% in 2026.

Takeaways for Altria Investors

Altria faces notable challenges, including declining cigarette volumes, intensifying competition in smoke-free products and ongoing regulatory and legal uncertainties. These pressures have weighed on the stock’s recent performance. While Altria’s fundamentals remain resilient, near-term visibility is limited. As a result, investors may consider adopting a cautious stance and exploring alternative opportunities. MO currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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