Altria Bolsters Investor Confidence with Expanded Buyback and Regulatory Win

Altria US02209S1033

Shareholders of Altria Group received a dual dose of positive news this week. The tobacco giant has significantly increased its existing share repurchase authorization and, in a separate but concurrent development, secured crucial regulatory approval from the U.S. Food and Drug Administration (FDA) for new products in its smoke-free portfolio. These moves are seen as strategic pillars to support the equity as the company's core cigarette business continues to face structural decline.

In a key milestone for its diversification strategy, Altria announced that the FDA has granted marketing authorization for six new on! PLUS nicotine pouch products. This clearance removes regulatory uncertainty and allows the company to officially commercialize these smoke-free alternatives across the United States.

Market analysts, including those at Goldman Sachs, view this decision as a significant catalyst. It enables Altria to accelerate market penetration for its on! brand, which is already a growth driver within the oral tobacco segment. This expansion is critical as domestic cigarette shipment volumes persist in their downward trajectory, having contracted by 8.2% year-over-year in the third quarter.

Share Repurchase Program Doubled in Scale

Demonstrating confidence in its financial strength and a belief that its shares are undervalued, Altria's board has authorized a doubling of its stock buyback program. The initiative has been expanded from $1 billion to $2 billion, with the authorization remaining effective through the end of 2026.

The company has been an active purchaser of its own stock. During the third quarter alone, Altria repurchased approximately 1.9 million shares at an average price of $60.13. For the first nine months of the year, the buyback volume totaled 12.3 million shares at an average cost of $58.08, amounting to a total expenditure of $712 million. The enhanced $2 billion authorization provides substantial capacity for continued aggressive repurchases through the coming years.

Valuation, Dividend, and Earnings Outlook

At a recent trading price near $58.61, Altria's stock sits approximately 14.6% below its 52-week high. The shares trade at a forward price-to-earnings (P/E) ratio of 10.54 for the next twelve months. This valuation is notably below the industry average and stands in stark contrast to competitor Philip Morris International, which commands a P/E multiple of 19.17.

The company has maintained its quarterly dividend at $1.06 per share. Furthermore, management has reaffirmed its adjusted earnings per share guidance for the full year 2025, projecting it to fall within the range of $5.35 to $5.45.

Strategic Pillars for Future Stability

The twin announcements of the enlarged buyback and the FDA approval are currently viewed as foundational supports for the share price. Investors are closely monitoring the pace at which Altria's smoke-free products, like the newly authorized on! PLUS line, can capture market share in the competitive nicotine pouch category. The company's ability to offset the persistent shrinkage of its traditional cigarette division with dynamic growth in these alternative segments is now a central focus for the market.