Buy Or Sell Altria Stock At $62?

January 20th, 2026 by Trefis Team
-6.31%
Downside
61.76
Market
57.86
Trefis
MO: Altria logo
MO
Altria

Altria stock is up 8% this year on analyst optimism about its smoke-free products. But does the rally make it too expensive? Let’s work through this.

What are you actually paying for MO stock?

Here’s where things get interesting. By traditional measures, MO looks cheap:

  • P/E ratio of 11.8 vs. 24.6 for the S&P 500
  • P/S ratio of 5.1 vs. 3.3 for the market
  • P/FCF ratio of 11.9 vs. 21.7 for the S&P

You’re paying roughly half what you’d pay for the average stock. So what’s the catch?

Isn’t the business shrinking? Yes, and that’s the core tension here. Revenue has declined 0.9% annually over three years. The most recent quarter was essentially flat. This is a business in secular decline—people are smoking less.

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But here’s the counterpoint: who cares about revenue growth when margins are this strong? This is where Altria surprises. The numbers are exceptional:

Think about what this means. Even as volumes decline, Altria prints cash. They can raise prices to offset volume losses because their customers are addicted. It’s an ugly reality, but economically powerful.

That being said, if you seek an upside with less volatility than holding an individual stock like MO, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, see – Can Archer Aviation Stock Double From Here?

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Photo by Hans on Pixabay

Is the balance sheet strong enough to weather problems?

The balance sheet is moderate. The debt-to-equity ratio of 23.8% is manageable—actually slightly higher than the S&P’s 19.7%. The weak spot is cash: only 4.0% of assets versus 7.2% for the benchmark. They’re running lean, but the cash generation capacity compensates.

What happens when markets crash?

This is the uncomfortable part. MO has historically gotten hammered:

  • 2008 crisis: Down 81.8% (vs. 56.8% for S&P)—and never recovered that peak
  • 2020 pandemic: Down 38.8% (recovered in 14 months)
  • 2022 inflation shock: Down 27.2% (took over 2 years to recover)

Why does a “defensive” tobacco stock fall harder than the market? Two reasons: First, sin stocks get sold indiscriminately during panics. Second, recession fears hit discretionary purchases, and yes, even smokers cut back when times are tough.

So what’s the verdict—buy or pass?

Buy, but understand what you’re buying.

You’re getting exceptional profitability at a bargain valuation. The 11.8 P/E is hard to ignore when they’re generating 43% net margins. The bear case—revenue decline and weak crisis performance—is already reflected in that discount.

The wildcard is smoke-free products. If these gain traction, you’ve bought a transformation story at distressed prices. If they don’t, you still own a cash machine trading at half the market multiple.

The risk? You might endure painful drawdowns during market stress. The opportunity? Strong long-term returns from undervalued cash flows and potential re-rating if the smoke-free pivot works. For patient investors comfortable with volatility, MO at $62 looks attractive.

That said, remember investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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