MO Increases Smokeable Margins to 64% Amid 9% Decline in Cigarette Sales
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 08 2025
0mins
Source: NASDAQ.COM
Altria's Performance: In Q3 2025, Altria reported a 9% decline in cigarette volumes but achieved a 64.4% adjusted margin due to effective pricing strategies, particularly with Marlboro, which increased its market share to 59.6%.
Philip Morris International's Growth: Philip Morris experienced a 4.3% growth in combustible net revenue despite a 3.2% decline in cigarette shipments, driven by strong pricing and an increase in Marlboro's global market share.
Turning Point Brands' Success: Turning Point Brands saw a 39.7% increase in gross profit, largely due to significant growth in its Stoker’s segment, which benefited from the rising popularity of Modern Oral products.
Market Valuation and Outlook: Altria's stock has gained 0.7% recently, trading at a forward P/E ratio of 10.44, while earnings estimates for 2025 and 2026 have seen slight adjustments, reflecting a stable outlook amidst industry challenges.
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Analyst Views on PM
Wall Street analysts forecast PM stock price to fall
9 Analyst Rating
8 Buy
1 Hold
0 Sell
Strong Buy
Current: 188.950
Low
158.00
Averages
181.63
High
200.00
Current: 188.950
Low
158.00
Averages
181.63
High
200.00
About PM
Philip Morris International Inc. is an international tobacco company. The Company’s product portfolio primarily consists of cigarettes and smoke-free products. Its smoke-free business (SFB) also includes wellness and healthcare products, as well as consumer accessories, such as lighters and matches. The Company’s segments include Europe Region; South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region (SSEA, CIS & MEA); East Asia, Australia & PMI Global Travel Retail (EA, AU & PMI GTR), and Americas Region. The Company's brands include Marlboro, HEETS, IQOS, IQOS ILUMA, TEREA, VEEV and ZYN. Its IQOS smoke-free product brand portfolio includes heated tobacco and nicotine-containing vapor products. Its international cigarette brands are Chesterfield, L&M, and Philip Morris. It also owns a number of local cigarette brands, such as Dji Sam Soe and Sampoerna A in Indonesia, and Fortune and Jackpot in the Philippines.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- ETF Unit Trading Mechanism: Exchange-traded funds (ETFs) trade similarly to stocks, where investors are buying and selling “units” that can be created or destroyed based on investor demand, impacting the ETF's liquidity and market performance.
- Inflows and Outflows Monitoring: Weekly monitoring of changes in shares outstanding for ETFs helps identify those experiencing notable inflows (new units created) or outflows (old units destroyed), allowing for an assessment of their impact on underlying assets and shifts in market sentiment.
See More
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- Ban Impacts Expansion: India's steadfast ban on e-cigarettes and heat-not-burn tobacco products has significantly hindered Philip Morris International's plans to launch IQOS in the Indian market, despite years of lobbying efforts.
- Unrealized Market Potential: Although India ranks as the seventh-largest cigarette market globally, Philip Morris executives discussed the long-term value creation potential of IQOS with state officials at Davos, but failed to secure an exemption, highlighting market resistance.
- Growth in Smoke-Free Products: Since 2014, Philip Morris's smoke-free products have attracted over 35 million users, with sales from 27 markets now accounting for over 50% of total revenue, indicating strong momentum in other markets.
- Strong Financial Performance: In fiscal 2025, Philip Morris's cigarette and heated tobacco unit shipment volume rose 1.7% to 379.6 billion units, with India contributing a remarkable 39.2% growth, showcasing the potential market opportunities in the region.
See More
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- Conference Schedule: Philip Morris International will host a live audio webcast on February 18, 2026, at 10:00 AM ET during the CAGNY Conference, featuring Group CEO Jacek Olczak and CFO Emmanuel Babeau, which is expected to attract significant attention from investors and analysts.
- Portfolio Transformation: The company is committed to delivering a smoke-free future, with its current product portfolio including heat-not-burn, nicotine pouches, and e-vapor products, and by the end of 2025, over 43 million legal-age consumers globally are expected to use these smoke-free products, indicating a gradual shift away from traditional cigarettes.
- Revenue Contribution: As of 2025, the smoke-free business accounted for 41.5% of total net revenues, demonstrating significant financial achievements during the transformation process and laying a solid foundation for future growth.
- R&D Investment: Since 2008, Philip Morris has invested over $16 billion in developing and commercializing innovative smoke-free products, showcasing its strong capabilities in scientific assessment and market research, with the aim of completely ending cigarette sales.
See More
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- Robust Financial Performance: The company reported a 3.7% year-over-year organic revenue increase to $10.4 billion in Q4, with overall revenue climbing 6.8% and adjusted EPS rising 9.4% to $1.70, reflecting resilience and profitability amid market challenges.
- Positive Future Outlook: Philip Morris forecasts organic revenue growth of 5% to 7% in 2026, despite pressures from declining traditional cigarette volumes, while smoke-free product volumes are expected to rise by high single digits, showcasing the company's potential during its transformation.
- Strong Cash Flow Projections: The company anticipates generating $45 billion in operating cash flow over the next three years, with growth expected to accelerate in 2027 due to the end of taxation equalization in Japan for heated tobacco units and the launch of Iqos in the U.S., indicating strategic positioning in new market expansions.
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