Altria Group Boosts EPS Guidance, Sets Stage for Next Dividend Hike

Altria Group raised its EPS guidance, indicating a positive outlook for the company. Investors initially overlooked the company's potential due to the decline of the tobacco industry. However, a closer look at the financials reveals a promising future for the company.

Title: Altria Group Raises EPS Guidance, Indicating Positive Outlook

Altria Group (MO) recently raised its earnings per share (EPS) guidance, signaling a positive outlook for the company. Despite initial concerns about the declining tobacco industry, a closer look at Altria's financials reveals promising prospects. The company's adjusted EPS for the second quarter of 2025 climbed 8.3% to $1.44, surpassing analyst expectations [1].

Altria's revenue net of excise taxes fell 1.7% to $5.29 billion, while adjusted EPS climbed 8.3% to $1.44. The company's oral nicotine pouches, which compete with Philip Morris International's Zyn, saw strong growth, with shipment volumes climbing 26.5% to 52.1 million cans. Revenue in this segment rose 6% to $728 million. However, the company's cigarette business continues to experience large shipment declines, with overall shipment volumes down 10.2% [1].

Looking ahead, Altria raised the low end of its full-year adjusted EPS outlook to $5.35 to $5.45, representing 3% to 5% growth. This is up from a prior range of $5.30 to $5.45. The company's dividend remains attractive, with a current payout of $1.02 per quarter, or an annual rate of $4.08. However, through the first six months of the year, Altria's cash flows were not covering its dividend payout, which can be a red flag [1].

Despite these concerns, Altria's balance sheet remains healthy, with debt-to-EBITDA leverage of 2 times, which is reasonable. The company's transition towards smoke-free products, such as oral nicotine pouches, shows promise in offsetting declines in cigarette sales. Moreover, Altria's Njoy e-vapor business, despite patent disputes, continues to innovate with new product designs [1].

Investors should consider Altria's strong dividend history and the potential for continued growth in non-cigarette segments. However, the company's core business continues to face significant headwinds, and the sustainability of its dividend remains a concern. Altria's valuation, with a forward price-to-earnings (P/E) ratio of 11.5, appears attractive compared to its international counterpart, Philip Morris International [1].

In conclusion, Altria Group's recent EPS guidance increase signals a positive outlook, but investors should remain cautious about the company's core business and the sustainability of its dividend. The company's transition towards smoke-free products offers promising growth prospects, but the tobacco industry's regulatory challenges and declining consumer demand remain significant risks.

References
[1] https://www.fool.com/investing/2025/08/03/altria-has-a-big-dividend-yield-but-is-it-sustaina/
[2] https://seekingalpha.com/article/4808246-altria-group-raised-eps-guidance-exciting-next-potential-dividend-increase