Turning Point Brands Sees Promising ROCE Trends Amid Strong Performance

Turning Point Brands (TPB) has a return on capital employed (ROCE) of 18%, close to the tobacco industry average. Over the last five years, ROCE has increased substantially to 18%, and the amount of capital employed has risen by 27%. These trends indicate opportunities for profitable reinvestment and make TPB a company to watch for multi-bagger potential.

Altria Group, Inc. (MO) and Turning Point Brands, Inc. (TPB) are two companies navigating the rapidly growing nicotine pouch market. Altria's on! brand has seen significant growth in the second quarter of 2025, with shipments rising 26.5% year over year and capturing 16.7% share in the U.S. oral tobacco market [1]. This growth is driven by strong brand-building efforts, including event activations and digital campaigns, which have increased brand awareness by 7 percentage points. Altria's oral tobacco segment also delivered a 10.9% increase in adjusted operating companies income (OCI), with margins expanding to 68.7% [1].

Turning Point Brands (TPB) has also been making strides in the white nicotine pouch category. Modern Oral sales have increased nearly eightfold year over year to $30.1 million in the second quarter of 2025, with a return on capital employed (ROCE) of 18%, close to the tobacco industry average [1]. Over the last five years, TPB's ROCE has increased substantially to 18%, and the amount of capital employed has risen by 27%. These trends indicate opportunities for profitable reinvestment and make TPB a company to watch for multi-bagger potential [1].

Both companies are facing intense competition in the pouch category. Philip Morris International Inc. (PM) continues to strengthen its position through ZYN, with U.S. offtake growth of 26% in the second quarter of 2025 and global volumes surging 43% [1]. Turning Point Brands' FRE and ALP are also gaining traction through both direct-to-consumer and retail channels, indicating their emergence as a fast-growing challenger to larger players [1].

Altria's stock has gained 8.5% in the past month compared to the industry's growth of 3.9%, and its forward price-to-earnings ratio is 12.2X, down from the industry's average of 15.35X [1]. TPB's stock performance and valuation are not explicitly mentioned in the provided source materials. However, its strong financial performance and growth potential make it an intriguing investment opportunity for investors and financial professionals to consider.

References:
[1] https://www.tradingview.com/news/zacks:3c652d7c6094b:0-can-on-help-altria-capture-more-of-the-booming-pouch-market/