Altria’s Transition: Oral Nicotine Gains Offset Cigarette Declines

Altria US02209S1033

Altria Group finds itself navigating a tale of two businesses. The company's traditional cigarette operations continue to face structural headwinds, but this is being counterbalanced by a surge in its modern oral nicotine segment. The performance of its on! nicotine pouch brand is providing a critical, though not yet decisive, offset to the broader challenges.

Shares of Altria recently traded at $57.67, hovering just below their 52-week peak of $58.75 and reflecting a modest monthly decline of 1.8%. Despite this near-term movement, institutional investors have demonstrated ongoing interest. Mattson Financial Services recently established a new position, acquiring nearly 18,000 shares valued at approximately $1.2 million. Ameriprise Financial also increased its stake over the course of the year.

The stock’s valuation appears restrained. With a forward price-to-earnings ratio of 10.36, Altria trades at a notable discount to the industry average of around 14.5. This suggests the market has not fully priced in a successful business model transition, or retains doubts about its ultimate outcome.

on! Pouches Drive Segment Growth

The growth metrics for Altria’s on! brand are compelling. For the first nine months of fiscal 2025, shipments soared by 14.8 percent to reach 133.6 million cans. The third quarter alone saw 42.2 million cans shipped to retailers.

A particularly notable achievement is the brand's pricing power. In an environment of industry-wide price pressure for nicotine pouches, Altria managed to increase on! selling prices by 1.5 percent during Q3. This performance has helped the brand capture an 8.7 percent share of the total oral tobacco market. The dynamism in this segment is providing stability to the oral tobacco operating income, partially compensating for declines elsewhere.

Dividend and Capital Return Provide Foundation

For the current fiscal year, Altria has provided earnings per share guidance in the range of $5.37 to $5.45. The company is also returning capital to shareholders through a $2.0 billion share repurchase program initiated in October.

The quarterly dividend of $1.06 per share is scheduled for payment on January 9, 2026. This substantial payout remains a cornerstone of the investment thesis for income-focused shareholders and is expected to provide underlying support for the share price during periods of weakness.

Altria is firmly in a transitional phase. While the growth in modern nicotine products is tangible and accelerating, the company's reliance on a gradually contracting cigarette business remains significant. The current modest valuation largely mirrors this fundamental tension between legacy challenges and new growth avenues.