Altria’s first quarter results were shaped by continued declines in its core cigarette volumes, which management attributed mainly to consumer migration toward illicit flavored e-vapor products and ongoing inflationary pressure. CEO Billy Gifford noted, “The cumulative impact of inflation over time is driving consumers to seek price relief, particularly through illicit e-vapor options.” Despite these headwinds, Altria leveraged robust pricing strategies and maintained profitability in its smokeable segment, supported by Marlboro’s brand strength and targeted use of promotional resources.
Is now the time to buy MO? Find out in our full research report (it’s free).
Altria (MO) Q1 CY2025 Highlights:
- Revenue: $4.52 billion vs analyst estimates of $4.64 billion (4.2% year-on-year decline, 2.5% miss)
- Adjusted EPS: $1.23 vs analyst estimates of $1.19 (3.5% beat)
- Operating Margin: 39.6%, down from 56.7% in the same quarter last year
- Market Capitalization: $100.6 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Altria’s Q1 Earnings Call
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Matt Smith (Stifel) asked about the impact of macroeconomic and cross-category factors on cigarette volume declines. CEO Billy Gifford explained that while inflation remains a factor, the primary driver is consumer migration to illicit e-vapor products due to flavor variety and pricing.
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Gaurav Jain (Barclays) questioned Altria’s approach to discount brand pricing and its strategy in the discount segment. Gifford clarified that discount brands like Basic are used to retain consumers but the company remains focused on premium brand profitability.
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Gaurav Jain (Barclays) also asked about ON!’s growth trajectory and competitive risks. Gifford acknowledged growth may moderate as the base expands but emphasized excitement for upcoming products like ON! PLUS and ongoing momentum.
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Gaurav Jain (Barclays) inquired about the future of Altria’s e-vapor strategy after NJOY ACE’s market exit. Gifford emphasized long-term commitment to the category, ongoing legal efforts, and the need for regulatory clarity and enforcement.
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Bonnie Herzog (Goldman Sachs) sought details on cigarette price gaps and share retention strategies. Gifford explained that pricing is managed at the store level using analytics, and the national price gap metric was discontinued due to limited relevance to business decisions.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the impact of regulatory enforcement on illicit e-vapor products and the timeline for potential FDA authorizations; (2) the success of ON! and any new product introductions in sustaining growth within oral nicotine; and (3) signals of changing consumer price sensitivity or downtrading patterns as inflation and tariffs evolve. Progress in Altria’s legal and regulatory efforts in e-vapor will also be closely monitored.
Altria currently trades at $59.60, up from $58.17 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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