Altria Forecast: Earnings Growth Amid Smokable Declines

Altria, the U.S.'s largest tobacco firm, has seen stable earnings and dividends despite a declining cigarette market. Concerns arise about its growth sustainability amidst decreases in smoking rates and competition.

Date: 07-03-2025

AI Rating: 6

**Earnings Per Share (EPS):** Over the last five years, Altria's adjusted EPS has grown at a CAGR of 4%, reflecting the success of its pricing and cost-cutting strategies. For 2025, the company expects EPS growth of 2% to 5%. This trend suggests an ongoing resilience even in a challenging market. **Revenue Growth:** Altria's revenue has grown modestly at an annual rate of less than 1% from $19.8 billion to $20.4 billion over the last five years. This sluggish growth underlines the pressures from declining smokeable product sales and heightened competition. **Free Cash Flow (FCF):** Altria's FCF projections seem promising, as it anticipates that its smokeless product investments will start boosting FCF this year. However, it's noteworthy that in 2024, the company spent more than 100% of its FCF on dividends and buybacks, potentially signaling unsustainability in cash return strategies. Altria's strategy of diversifying away from traditional tobacco products could mitigate earnings pressure. However, reliance on smokeable products (87% of revenue as of 2024) poses risks to long-term growth. Analysts predict EPS will continue a slight upward trend, indicating steady but not exceptional performance. In summary, while Altria may sustain reliable dividend payouts, its stock growth in the next five years may face constrained margins against a backdrop of decreasing smoking rates and market competitiveness.

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