Is Altria Group, Inc. (NYSE:MO) Currently Priced 41% Below Its Value?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 31 2025
0mins
Should l Buy MO?
Source: Yahoo Finance
Altria Group Valuation Analysis
- Fair Value Estimate: Altria Group's fair value is estimated at US$114, indicating a significant undervaluation of 41% compared to its current share price of US$67.21.
- Analyst Price Target: The average analyst price target for Altria is US$62.88, which is 45% lower than the fair value estimate.
Discounted Cash Flow (DCF) Model
- Methodology: The analysis employs a two-stage DCF model, which accounts for an initial high growth phase followed by a steady growth period. Future cash flows are estimated and discounted to present value.
- Projected Cash Flows: Expected levered free cash flows (FCF) from 2026 to 2035 are projected to grow from US$8.97 billion to US$11.5 billion, with growth rates gradually increasing from 1.70% to 2.85%.
- Present Value Calculation: The present value of the 10-year cash flows totals approximately US$69 billion, discounted at a rate of 7.7%.
Terminal Value and Total Equity Value
- Terminal Value Calculation: The terminal value is calculated at US$256 billion, using a conservative growth rate of 3.1% based on the 5-year average of the 10-year government bond yield.
- Total Equity Value: The total equity value, combining the present value of cash flows and terminal value, is estimated at US$191 billion, leading to a per-share valuation that suggests the stock is undervalued.
Financial Strengths and Weaknesses
- Strengths: Altria's earnings and cash flows adequately cover its debt and dividends, placing it in the top 25% of dividend payers in the market.
- Weaknesses: The company has experienced a decline in earnings over the past year, and total liabilities exceed total assets, raising financial distress concerns.
Future Outlook and Risks
- Growth Forecast: Annual earnings are expected to grow over the next three years, although at a slower rate compared to the broader American market.
- Investment Considerations: The analysis emphasizes that valuation is just one aspect of investment decisions, and potential investors should consider risks, future earnings growth, and alternative investment opportunities.
Conclusion
- Valuation Limitations: The DCF model is not foolproof and should be used to test assumptions rather than provide definitive valuations. Changes in growth rates or cost of equity can significantly alter outcomes.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy MO?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on MO
Wall Street analysts forecast MO stock price to fall
8 Analyst Rating
4 Buy
3 Hold
1 Sell
Moderate Buy
Current: 67.530
Low
57.00
Averages
65.00
High
72.00
Current: 67.530
Low
57.00
Averages
65.00
High
72.00
About MO
Altria Group, Inc. operates a portfolio of tobacco products for United States tobacco consumers aged 21+. Its segments include smokeable products and oral tobacco products. The smokeable products segment consists of combustible cigarettes and machine-made large cigars. The oral tobacco products segment includes moist smokeless tobacco (MST) products and oral nicotine pouches. Its wholly owned subsidiaries include manufacturers of both combustible and smoke-free products. In combustibles, it owns Philip Morris USA Inc. (PM USA), and John Middleton Co. (Middleton), which are cigarette manufacturers. Its smoke-free portfolio includes ownership of U.S. Smokeless Tobacco Company LLC (USSTC), a global MST manufacturer, Helix Innovations LLC (Helix), a manufacturer of oral nicotine pouches, and NJOY, LLC (NJOY), an e-vapor manufacturer with a commercialized product portfolio. The brand portfolios of its operating companies include Marlboro, Black & Mild, Copenhagen, Skoal, on! and NJOY.
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.
Analysis of Investment Potential in Consumer Staples Stocks
- Costco's Growth Potential: Over the past five years, Costco has achieved a total return of 220%, significantly outperforming the S&P 500's 82%, and despite a current P/E ratio of 49.5, its ongoing high growth narrative may sustain this valuation, with future earnings expected to continue rising.
- Altria's Wealth-Building Capability: With a dividend yield of 6.16%, Altria has attracted investors, with a 15% stock price increase over the past year translating to a total return of 23% when dividends are reinvested; despite competitive pressures, its efforts in the smoke-free product space may provide future growth momentum.
- Walmart's Digital Transformation: Walmart has significantly outperformed the S&P 500 in total returns over the past decade, with e-commerce sales growing 24% in 2025, accounting for 23% of global sales, and the integration of artificial intelligence is expected to further drive revenue and earnings growth.
- Strategic Importance of Dividend Growth: Both Costco and Walmart are committed to increasing dividends, with Costco raising payouts by 12%-13% annually and Walmart by 9.2% last year, which will provide investors with stable cash flow and enhance long-term investment appeal.
See More
Investment Potential of Costco, Altria, and Walmart
- Costco's Strong Performance: Over the past five years, Costco's stock has generated total returns of approximately 220%, compared to 82% for the S&P 500, indicating robust growth potential in the market, despite its current P/E ratio of 49.5, which may be seen as overvalued.
- Altria's Dividend Appeal: With a dividend yield of 6.2%, Altria's shares have risen 15% over the past year, and when including dividend reinvestment, the total return reaches 23%, showcasing its solid performance in consumer staples, despite competitive pressures.
- Walmart's E-commerce Transformation: Walmart's global e-commerce net sales grew by 24% in 2025, accounting for 23% of total sales, demonstrating its successful transition into an e-commerce giant, although concerns about its current valuation persist with a P/E ratio of 42.
- Future Growth Potential: Costco, Altria, and Walmart all exhibit strong growth potential in their respective sectors, with Costco's dividend growth rate at 12% to 13%, Altria expanding its market through new products, and Walmart enhancing operational efficiency through AI technology, all of which could drive future stock price increases.
See More
Three Consumer Staples Stocks for Long-Term Wealth Creation
- Costco's Growth Potential: Over the past five years, Costco's stock has generated a total return of 220%, significantly outperforming the S&P 500's 82%, indicating strong market performance; however, with a current P/E ratio of 49.5 and legal challenges ahead, its sustained earnings growth may support this high valuation.
- Altria's Wealth Generation Ability: Despite declining smoking rates, Altria's stock has risen 15% in the past year, with a total return of 23% when including dividend reinvestment, showcasing its appeal as a high-yield stock, and future growth could be bolstered through new products and acquisitions.
- Walmart's Digital Transformation: Walmart has significantly outperformed the S&P 500 over the past decade, with global e-commerce net sales growing 24% in 2025, accounting for 23% of total sales; the integration of AI could further enhance revenue and earnings, despite a current P/E ratio of 42.
- Cautious Investment Recommendations: While Costco is viewed as a strong buy, analysts suggest it may not be the best investment at this time, recommending attention to ten other potential stocks, reflecting a cautious outlook on Costco's future performance.
See More
Investment Opportunities Amid Economic Recession
- Walmart's Resilience: Historically, Walmart has outperformed during major recessions, with a 21% stock increase in 2020, and now derives about 60% of its sales from groceries, enhancing its appeal during economic downturns and expected to continue attracting consumers.
- Netflix's Entertainment Edge: During recessions, Netflix's stock rose 12% in 2008 and 67% in 2020, and the introduction of lower-priced ad-supported tiers is likely to further boost its subscriber growth potential amid economic slowdowns.
- Philip Morris's Growth Potential: Despite facing volume declines in the U.S., Philip Morris shows strong international demand and rapid growth in its smoke-free products, particularly Zyn and Iqos, positioning it well for performance during a recession.
- Defensive Investment Strategy: In light of increasing economic uncertainty, companies like Walmart, Netflix, and Philip Morris demonstrate strong risk resilience, making them attractive candidates for defensive investment portfolios to navigate potential market volatility.
See More
Investment Opportunities During Economic Recession
- Walmart's Resilience: Historically, Walmart has outperformed during three major recessions, including a 21% increase during the COVID-19 pandemic, demonstrating its market resilience as a low-cost retailer, and is expected to continue attracting consumers amid future economic uncertainties.
- Netflix's Growth Potential: Netflix has shown strong stock performance during recessions, with a 12% rise in 2008 and a 67% increase in 2020, and the introduction of lower-priced ad-supported tiers is likely to enhance its subscriber appeal during economic downturns.
- Philip Morris's Market Positioning: Although Philip Morris has not faced significant recessions since its spin-off in 2008, its tobacco products' economic insensitivity and the growth potential of its smoke-free portfolio position it well for strong performance during downturns, especially with sustained demand in international markets.
- Investor Caution: While Walmart is viewed as a defensive investment, analysts suggest that there are currently ten other stocks that may offer higher returns, prompting investors to carefully consider market dynamics when making investment decisions.
See More
Strong Dividend ETF Recommendation
- Dividend Yield: The Schwab U.S. Dividend Equity ETF (SCHD) recently offers a dividend yield of 3.3%, providing a stable income source amidst current economic uncertainties, appealing to defensive investors.
- Historical Performance: Since its inception in 2011, the ETF has achieved an average annual return of 13.30%, with a 15.67% return over the past year, demonstrating strong performance in volatile markets and boosting investor confidence.
- Portfolio Strength: SCHD holds approximately 100 stocks, including blue-chip companies like Lockheed Martin, Coca-Cola, and PepsiCo, ensuring investment diversity and stability, thereby providing long-term capital appreciation potential for investors.
- Long-Term Investment Returns: Investing $1,200 annually, with an assumed annual return of 10%, could yield around $68,730 after 20 years, highlighting the ETF's appeal as a long-term investment vehicle.
See More
Analysis of Investment Potential in Consumer Staples Stocks
- Costco's Growth Potential: Over the past five years, Costco has achieved a total return of 220%, significantly outperforming the S&P 500's 82%, and despite a current P/E ratio of 49.5, its ongoing high growth narrative may sustain this valuation, with future earnings expected to continue rising.
- Altria's Wealth-Building Capability: With a dividend yield of 6.16%, Altria has attracted investors, with a 15% stock price increase over the past year translating to a total return of 23% when dividends are reinvested; despite competitive pressures, its efforts in the smoke-free product space may provide future growth momentum.
- Walmart's Digital Transformation: Walmart has significantly outperformed the S&P 500 in total returns over the past decade, with e-commerce sales growing 24% in 2025, accounting for 23% of global sales, and the integration of artificial intelligence is expected to further drive revenue and earnings growth.
- Strategic Importance of Dividend Growth: Both Costco and Walmart are committed to increasing dividends, with Costco raising payouts by 12%-13% annually and Walmart by 9.2% last year, which will provide investors with stable cash flow and enhance long-term investment appeal.
See More
Investment Potential of Costco, Altria, and Walmart
- Costco's Strong Performance: Over the past five years, Costco's stock has generated total returns of approximately 220%, compared to 82% for the S&P 500, indicating robust growth potential in the market, despite its current P/E ratio of 49.5, which may be seen as overvalued.
- Altria's Dividend Appeal: With a dividend yield of 6.2%, Altria's shares have risen 15% over the past year, and when including dividend reinvestment, the total return reaches 23%, showcasing its solid performance in consumer staples, despite competitive pressures.
- Walmart's E-commerce Transformation: Walmart's global e-commerce net sales grew by 24% in 2025, accounting for 23% of total sales, demonstrating its successful transition into an e-commerce giant, although concerns about its current valuation persist with a P/E ratio of 42.
- Future Growth Potential: Costco, Altria, and Walmart all exhibit strong growth potential in their respective sectors, with Costco's dividend growth rate at 12% to 13%, Altria expanding its market through new products, and Walmart enhancing operational efficiency through AI technology, all of which could drive future stock price increases.
See More
Three Consumer Staples Stocks for Long-Term Wealth Creation
- Costco's Growth Potential: Over the past five years, Costco's stock has generated a total return of 220%, significantly outperforming the S&P 500's 82%, indicating strong market performance; however, with a current P/E ratio of 49.5 and legal challenges ahead, its sustained earnings growth may support this high valuation.
- Altria's Wealth Generation Ability: Despite declining smoking rates, Altria's stock has risen 15% in the past year, with a total return of 23% when including dividend reinvestment, showcasing its appeal as a high-yield stock, and future growth could be bolstered through new products and acquisitions.
- Walmart's Digital Transformation: Walmart has significantly outperformed the S&P 500 over the past decade, with global e-commerce net sales growing 24% in 2025, accounting for 23% of total sales; the integration of AI could further enhance revenue and earnings, despite a current P/E ratio of 42.
- Cautious Investment Recommendations: While Costco is viewed as a strong buy, analysts suggest it may not be the best investment at this time, recommending attention to ten other potential stocks, reflecting a cautious outlook on Costco's future performance.
See More
Investment Opportunities Amid Economic Recession
- Walmart's Resilience: Historically, Walmart has outperformed during major recessions, with a 21% stock increase in 2020, and now derives about 60% of its sales from groceries, enhancing its appeal during economic downturns and expected to continue attracting consumers.
- Netflix's Entertainment Edge: During recessions, Netflix's stock rose 12% in 2008 and 67% in 2020, and the introduction of lower-priced ad-supported tiers is likely to further boost its subscriber growth potential amid economic slowdowns.
- Philip Morris's Growth Potential: Despite facing volume declines in the U.S., Philip Morris shows strong international demand and rapid growth in its smoke-free products, particularly Zyn and Iqos, positioning it well for performance during a recession.
- Defensive Investment Strategy: In light of increasing economic uncertainty, companies like Walmart, Netflix, and Philip Morris demonstrate strong risk resilience, making them attractive candidates for defensive investment portfolios to navigate potential market volatility.
See More
Investment Opportunities During Economic Recession
- Walmart's Resilience: Historically, Walmart has outperformed during three major recessions, including a 21% increase during the COVID-19 pandemic, demonstrating its market resilience as a low-cost retailer, and is expected to continue attracting consumers amid future economic uncertainties.
- Netflix's Growth Potential: Netflix has shown strong stock performance during recessions, with a 12% rise in 2008 and a 67% increase in 2020, and the introduction of lower-priced ad-supported tiers is likely to enhance its subscriber appeal during economic downturns.
- Philip Morris's Market Positioning: Although Philip Morris has not faced significant recessions since its spin-off in 2008, its tobacco products' economic insensitivity and the growth potential of its smoke-free portfolio position it well for strong performance during downturns, especially with sustained demand in international markets.
- Investor Caution: While Walmart is viewed as a defensive investment, analysts suggest that there are currently ten other stocks that may offer higher returns, prompting investors to carefully consider market dynamics when making investment decisions.
See More
Strong Dividend ETF Recommendation
- Dividend Yield: The Schwab U.S. Dividend Equity ETF (SCHD) recently offers a dividend yield of 3.3%, providing a stable income source amidst current economic uncertainties, appealing to defensive investors.
- Historical Performance: Since its inception in 2011, the ETF has achieved an average annual return of 13.30%, with a 15.67% return over the past year, demonstrating strong performance in volatile markets and boosting investor confidence.
- Portfolio Strength: SCHD holds approximately 100 stocks, including blue-chip companies like Lockheed Martin, Coca-Cola, and PepsiCo, ensuring investment diversity and stability, thereby providing long-term capital appreciation potential for investors.
- Long-Term Investment Returns: Investing $1,200 annually, with an assumed annual return of 10%, could yield around $68,730 after 20 years, highlighting the ETF's appeal as a long-term investment vehicle.
See More
