Neither Altria nor Philip Morris has done very well lately.
Modified risk products now account for more than 17% of Philip Morris' total net revenue.
Right now, the two stocks have yields that are very close to each other, with Philip Morris International's 5.3% yield just nosing out Altria at 5.1%.Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.In terms of valuation, it's a bit tough to compare the two stocks using trailing earnings measures because tax reform and other one-time issues have had a dramatic impact on recent bottom-line results. The Food and Drug Administration authorized the sale of IQOS products in the U.S. in 2019, but hasn't actually approved them. IQOS, a major part of that portfolio, saw unit volumes increase 85% year over year in the third quarter. About 8.8 million people outside of the U.S. have already begun using the IQOS, according to Philip Morris International, with whom Altria has a licensing agreement.
Photo by Pascal Le Segretain/Getty Images. Returns as of 07/30/2020.
I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics.
But the two stocks actually behave much differently, and that can make one a buy even when the other doesn't deserve as much attention.
Find the latest Altria Group, Inc. (MO) stock quote, history, news and other vital information to help you with your stock trading and investing. Altria's stock price is down 21% since May 2017, while Philip Morris has dropped an even more precipitous 29% over the same time span.Image source: Philip Morris International.Stock Advisor launched in February of 2002. For 2018, Philip Morris expects adjusted EPS to grow 8-10%, and Altria Group expects its adjusted EPS to grow 16-19%. Nor has it called them safe, and the companies are not allowed to market IQOS with claims of reduced health risks.Please give an overall site rating:One major risk for IQOS and its HTUs, which the company hopes will eventually earn FDA classification as modified risk products, is that they could get lumped together with vaping products. MO | Complete Altria Group Inc. stock news by MarketWatch. These factors helped offset a 1.4% shipment volume decline. Vaping products -- which use nicotine-containing liquids, not actual tobacco -- have been associated with 52 deaths and 2,400 cases of lung injury, according to the CDC.
For the most part, though, these two stocks look very similar on a valuation basis.Neither Altria nor Philip Morris has done very well lately. This suggests Altria’s stock price loss was 3.6x PM’s stock loss. When you look at future earnings estimates, though, the disparity narrows considerably. Management expects earnings to grow at an annualized rate of 5% to 8% from 2020 to 2022.
For over two decades, Altria has led the industry with premium tobacco brands, a focus on harm reduction and strong financial performance. The company also spoke of the success of its reduced-risk tobacco products like IQOS, and the HTUs (heated tobacco units) it consumes.Like us on Facebook to see similar stories"These companies last traded on their current P/Es in the late 1990s and early 2000s, when investors thought that litigation might lead to bankruptcy," wrote Spielman.Altria's recently reported third-quarter results showed again that it has pricing power in the market, as it continued to use price hikes to power its growth. Philip Morris International reported strong Q3 earnings in October, boosted by pricing increases and market share gains.
PM has increased its size lead over Altria in terms of revenue base from $6.4 billion in 2009 to $10 billion in 2018. Management forecasts annual earnings-per-share growth of at least 8% through 2021. Philip Morris International reported strong Q3 earnings in October, boosted by pricing increases and market share gains. Topline: Plans to reunite Big Tobacco in a merger between Altria …
These factors helped offset a 1.4% shipment volume decline.
Now many countries, including the U.S., are moving toward banning or heavily taxing vaping products.In some countries, IQOS products are already subject to stringent government regulation along with vaping products.
Altria should also benefit from the FDA's recent shift away from tighter restrictions on the amount of nicotine in cigarettes sold in the U.S.But which of those businesses looks like a better investment today?Altria recently began selling the IQOS, a heat-not-burn tobacco product that it claims is less unhealthy than traditional cigarettes.
Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016.
But wait a minute, close rival Philip Morris stock (NYSE: PM) price has seen only an 8% drop during the same period. Numbers are also close together when you consider enterprise value-based measures.
Altria still has a slight advantage, trading at 13 times forward earnings compared to 14 for Philip Morris.
Though both companies saw their revenue base grow, Altria's revenue has largely increased at a steady rate, whereas PM saw a lot of volatility in revenues over recent years.
Better Buy: Altria vs. Philip Morris International One's a domestic tobacco powerhouse, the other operates globally.
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