Can Pricing Power Offset Soft Cigarette Volumes at Altria?

Altria Group, Inc. MO continues to navigate a challenging landscape in the smokeable products segment, where significant volume declines are being tested against its pricing power. 

In 2025, the company reported a 10% decrease in domestic cigarette shipment volume. When adjusted for trade inventory movements and other factors, the estimated industry-wide decline was 8%, caused by the proliferation of illicit e-vapor products and discretionary income pressures on adult nicotine consumers.

Despite these volume headwinds in certain quarters, Altria’s strategy of aggressive pricing has largely defended its profitability. In 2025, the smokeable products segment recorded a 1.5% increase in reported operating companies income (OCI) and a 1.3% rise in adjusted OCI. 

This improvement was primarily attributed to higher pricing and lower per-unit settlement charges, which more than offset the impact of lower shipment volumes and increased promotional investments. Adjusted OCI margin for the segment expanded 1.8 percentage points to 63.4% for full-year 2025.

Taken together, the results highlight the ongoing interaction between pricing and volume trends within Altria’s cigarette business. However, the extent to which pricing can continue to counter volume pressures will depend on evolving consumer demand, competitive conditions and broader industry trends.

Altria’s Peers on Pricing vs Volume

Philip Morris International Inc. PM similarly relies on strong pricing to offset volume pressures in its combustible business. In the third quarter of 2025, cigarette shipment volumes declined 3.2%, while Philip Morris delivered high single-digit combustible pricing of more than 8%. This pricing-led approach supported a 1% increase in organic net revenues and a 4.8% rise in organic gross profit for the combustible segment. Overall, the results underscore how pricing remains a critical lever for Philip Morris in mitigating the impact of persistent volume declines in its traditional cigarette portfolio.

Turning Point Brands, Inc. TPB is increasingly shifting its reliance away from heritage products toward the "Modern Oral" segment to drive growth. In the third quarter of 2025, Turning Point Brands’ net sales jumped 31.2% to $119 million. This surge was fueled by a 627.6% year-over-year increase in Modern Oral sales, which now account for 30.8% of total revenues. Strong pricing and favorable product mix supported a 360 basis-point expansion in consolidated gross margins to 59.2%, highlighting how portfolio transformation and pricing dynamics are reshaping Turning Point Brands' growth and margin profile.

Altria’s Price Performance, Valuation & Estimates

Shares of Altria have gained 13.9% in the past month compared with the industry’s growth of 11.5%.

From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 11.48X, down from the industry’s average of 15.74X.

The Zacks Consensus Estimate for MO’s 2026 earnings per share has inched down 1 cent in the past seven days to $5.57, while the same for 2027 has moved up 4 cents to $5.75.

Altria currently carries a Zacks Rank #3 (Hold). 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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