Altria Group (MO)

Conclusion

Altria Group is a United States tobacco company. Its main products are Marlboro cigarettes, Black & Mild cigars, Copenhagen and Skoal smokeless tobacco, on! nicotine pouches and NJOY e-vapor products. On 2026-11-09 the shares were priced at 75.81 USD, giving a market capitalisation of 126.1 billion USD.

The verdict is fair. Earnings trade at 15.5x against a ten-year median of 14.1x, a premium of 10.0%, and sales at 5.9x against a median of 3.8x, a premium of 57.2%. EV/EBITDA is 12.3x against a median of 12.4x, a premium of -0.9%. The DCF gives 78.95 USD per share at a discount rate of 8.87%, and the fair value from historical multiples is 65.10 USD. The fair value band runs from 57.62 to 86.43 USD with a midpoint of 72.03 USD, a margin of safety of -5.0% at the current price. The reverse DCF implies growth of 0.6% a year. Revenue has fallen by 5.1% a year over five years, while free cash flow per share has grown by 4.3% a year.

What holds the case up is the return on capital: ROIC of 45.5% against a WACC of 8.0%, and free cash flow conversion of 111.8% over the last twelve months. What would break it is the sales decline, with revenue down 7.1% a year over three years, and the current ratio of 0.58, which is below 1. The company also has negative shareholders' equity.

Financial health

Financial strength is yellow: net debt to EBITDA of 1.8x, interest coverage of 9.9x and an Altman Z-score of 5.19 hold it up, while a current ratio of 0.58 and a quick ratio of 0.37 pull it down. The Altman Z-score of 5.19 sits in the safe zone, although that model was designed for manufacturers and Altria is a tobacco company. Insolvency risk: low, about 1.7% by the estimate of the Ohlson model over one to two years, based on year-end 2025 figures. Debt to equity is not available because the company has negative shareholders' equity.

Earnings quality

Earnings quality is green. Free cash flow conversion is 111.8% over the last twelve months and 124.5% over five years, and the accrual ratio of -6.7% shows cash earnings running ahead of reported profit. Free cash flow after stock-based compensation is 9.07 billion USD, but the company does not report its stock-based compensation, so that ratio to revenue is not available. The share count has fallen by 2.0% a year over five years, which points to buybacks. The Piotroski score is 6 of 9, and the Beneish M-score of -2.88 reads as unlikely to indicate manipulation. The company beat estimates in 5 of the last 8 quarters, with an average surprise of 1.5%. Seven current-year estimates moved up in the last 30 days and none moved down.

Profitability

Profitability is green. Gross margin is 69.9% against a ten-year median of 57.6%, operating margin is 57.9% against a median of 46.4%, and net margin is 38.1% against a median of 30.3%. Operating margin has a stability reading of 14.1%. ROIC is 45.5% against a WACC of 8.0%, with a ROIC minus WACC value of 37.5%, and its five-year median is 44.1%. Return on equity is not available because equity is negative, so the DuPont split for 2025 is the better guide: a net margin of 34.5% and an asset turnover of 0.58x. Those figures show that the returns come from margins and turnover rather than from leverage.

Growth

Growth is red. Revenue compound growth is -7.1% over three years, -5.1% over five years and 0.7% over ten years, and revenue grew in only 4 of the 10 comparable years. Earnings per share compound at 9.0% over three years, 11.5% over five years and 4.5% over ten years. Free cash flow per share compounds at 6.6%, 4.3% and 6.7% over the same periods. Analysts expect earnings per share to grow by 3.9% next year, and that estimate has moved by 0.8% over the last 90 days.

Valuation

Valuation is yellow. Earnings trade at a 10.0% premium to their ten-year median and sales at a 57.2% premium, while EV/EBITDA sits at a -0.9% premium, and free cash flow is at a 23.7% premium (13.9x against a median of 11.2x). The DCF gives 78.95 USD per share at a discount rate of 8.87%, and the terminal value makes up 53.5% of it. The fair value from historical multiples is 65.10 USD, and the fair value band runs from 57.62 to 86.43 USD with a midpoint of 72.03 USD and a margin of safety of -5.0%. The reverse DCF implies growth of 0.6%, against revenue growth of -5.1% and free cash flow per share growth of 4.3% over five years. The fair value is an order-of-magnitude estimate built on fixed assumptions, a 5% equity risk premium and capped growth, not a price target. The dividend yield is 5.6%, the forward yield 5.7%, and the payout on free cash flow 78.4%.

Risks

The weakest numbers would each damage the company in a specific way. A current ratio of 0.58 leaves little short-term liquidity cushion. Revenue shrinking by 5.1% a year over five years would erode the base on which the margins sit, and a premium of 57.2% on sales leaves little room if that trend continues. Negative shareholders' equity means balance-sheet strength rests on cash generation rather than on book value. Not available: debt to equity, return on equity, stock-based compensation to revenue, and the current price to book ratio, although the ten-year median price to book is 11.4. This analysis has no debt maturity schedule and no revenue by segment, so it cannot show when debt falls due or which products drive the decline.