Altria Group's Tempting Valuation May Hide a Value Trap Worth Avoiding

The Cheap Price Tag Isn’t What It Seems

On the surface, Altria Group (NYSE: MO) looks like a bargain hunter’s dream. The Marlboro cigarette maker trades at just 10.4 times forward earnings with a dividend yield exceeding 7%, numbers that would make any screener light up green. But appearances can be deceiving in the tobacco sector, especially when a company’s core business is under siege.

The real story behind that attractive valuation? Investors are pricing in years of decline, not opportunity. Before you’re lured in by smoking quotes about “deep value” investing, consider what’s actually happening beneath those surface metrics.

When Lower Valuations Signal Deeper Problems

Altria’s recent earnings report exposed why the stock has become a cautionary tale. Marlboro shipment volumes collapsed by 11.7% last quarter—a figure significantly worse than the company’s broader cigarette portfolio, suggesting consumers are abandoning the premium brand for cheaper alternatives or smoke-free products altogether.

The troubles extend beyond traditional cigarettes. The company’s oral tobacco division—home to legacy brands Skoal and Copenhagen plus the newer on! nicotine pouch product—showed alarming weakness. Skoal dropped 17.1%, Copenhagen fell 12.4%, and on!'s growth barely crawled forward at 0.7%. This was supposed to be Altria’s future, yet it’s stumbling worse than the legacy business.

Following these results, shares tumbled nearly 8%, and for good reason. The company issued guidance that disappointed expectations, reinforcing fears that both cigarette addiction and alternative product adoption are moving too slowly to offset volume declines.

The Comparison That Explains Everything

Here’s where the valuation gap becomes telling. Philip Morris International (NYSE: PM) trades at 18.5 times forward earnings—nearly double Altria’s multiple. Why the premium? Because Philip Morris actually executed its smoke-free pivot. Alternative products now represent 41% of its revenue, and its Zyn nicotine pouches are winning market share.

British American Tobacco (NYSE: BTI) commands 11.5 times forward earnings, and it’s also pulling ahead. With 18.2% of revenue from alternatives versus Altria’s mere 14%, it’s demonstrating tangible progress on the transition.

Altria’s lower valuation isn’t a bargain—it’s a market verdict. Investors are saying: “Show us you can transform, not just that you’re cheap.”

The Dividend Trap Nobody Wants to Fall Into

That 7%+ dividend yield? It could be a value investor’s poison pill. If the stock continues its descent—potentially into double-digit percentage declines—the dividend gains evaporate while shareholders absorb the losses. History suggests this is plausible; just years ago, Altria traded at single-digit forward multiples.

What Would Change This Narrative

For Altria to become genuinely investable again, one of two things must happen:

Option 1: Valuation compression continues, pushing the stock back to historic lows where the risk-reward equation becomes more reasonable.

Option 2: The company executes a meaningful strategic shift—perhaps its KT&G collaboration produces a breakout nicotine pouch product, or a well-timed acquisition substantially boosts alternative product exposure.

Without one of these catalysts, Altria remains what it appears to be: a mature cigarette manufacturer that’s too expensive for the growth it offers and too risky for the income it provides. The prudent move is to wait for either lower prices or genuine transformation before considering this stock a buy.