Is There Still Value in Altria After 23% YTD Surge in 2025?

If you own Altria Group stock, or you are simply on the fence about whether to buy, hold, or move on, you are hardly alone. Even among careful investors, opinions are split. Is this consumer giant trading for a steal or is it fairly valued, just cruising on its past reputation? The numbers are compelling. Despite a slight dip of -0.6% in the past week and a -0.7% pullback this month, Altria’s year-to-date return has soared to 23.2%. Over the past year, that number jumps to 39.6%. If you take a longer view, the story gets even more impressive. With total returns of 77.7% over three years and 165.2% across five years, this stock has quietly outperformed expectations and delivered steady growth for patient shareholders.

What’s driving this performance? Aside from Altria’s traditionally rock-solid cash flow and consumer loyalty, investors have been watching for regulatory news and developments in the tobacco and nicotine alternatives space. Recently, there has been buzz about the company’s disciplined capital allocation and a more favorable regulatory environment, both offering a tailwind for valuation. With all that in mind, Altria currently holds a value score of 5 out of 6 under our framework. This means the company is undervalued in nearly all of the major checks we use to assess investment potential.

But valuation isn’t just a single number or even a handful of ratios. Let’s break down these valuation methods to see where Altria shines. Stick around, because there’s a smarter, more holistic approach to understanding value that I’ll share at the end.

Why Altria Group is lagging behind its peers

Approach 1: Altria Group Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's value. This approach focuses on what Altria Group can generate in free cash flow over time, rather than relying on recent profits or book value.

For Altria Group, the DCF analysis uses the company’s latest twelve month Free Cash Flow of $8.7 Billion as a starting point. Analysts forecast steady growth, with free cash flow expected to reach $9.95 Billion by 2029. Beyond the analyst coverage, Simply Wall St extrapolates further cash flow growth into the next decade.

Based on this two-stage projection, the model calculates an intrinsic fair value of $111.93 per share for Altria, using all figures in $ (US Dollars). Compared to its current share price, Altria is trading at a 42.2% discount. This means the stock appears significantly undervalued by this measure.

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Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Altria Group.MO Discounted Cash Flow as at Oct 2025

Our Discounted Cash Flow (DCF) analysis suggests Altria Group is undervalued by 42.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Altria Group Price vs Earnings (P/E)

The Price-to-Earnings (P/E) ratio is a well-regarded valuation tool for profitable, stable companies like Altria Group. It essentially tells investors how much they are paying for each dollar of the company’s earnings. This measure works well for established businesses where earnings are steady and predictable because it provides a direct way to compare value both historically and across the industry.

What makes a “normal” or "fair" P/E ratio varies. Higher growth expectations can justify a higher multiple, while greater business risks or slower earnings growth typically lead to a lower one. The appropriate range depends on factors like the company's earnings consistency, its industry prospects, and how investors view potential risks or opportunities in the coming years.

Currently, Altria trades at a P/E ratio of 12.4x. For context, the average P/E for tobacco industry peers is 14.9x and leading peers are around 21.4x. Simply Wall St introduces its proprietary “Fair Ratio,” which for Altria comes in at 20.0x. This ratio considers not only sector averages, but also incorporates the company’s own growth outlook, profit margins, scale, and risk profile to create a more tailored benchmark. This makes the Fair Ratio a more relevant and insightful guide for valuation than raw comparisons to industry or peer averages alone.

With Altria's current P/E sitting well below the Fair Ratio, this metric indicates that the stock is significantly undervalued.

Result: UNDERVALUEDNYSE:MO PE Ratio as at Oct 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Altria Group Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is your personal perspective about a company, a story that connects what you believe about Altria’s business to the financial forecasts and fair value you assign. Instead of focusing only on numbers, Narratives allow you to set assumptions for future revenue, profit margins, and earnings. These beliefs are linked directly to a calculated fair value and a clear investment strategy.

This approach is built right into Simply Wall St’s Community page, a platform used by millions of investors, making it easy and accessible for anyone to apply. Narratives help you decide when to buy or sell by comparing what you think a share is worth to its actual market price. They update automatically when new earnings or company news is released. For example, some investors may hold an optimistic Narrative, using high margin and growth assumptions to justify a fair value as high as $73 per share. Others with a more cautious outlook see regulatory risks and justify a value as low as $49. Narratives empower you to invest with confidence by making your decisions truly your own.

Do you think there's more to the story for Altria Group? Create your own Narrative to let the Community know!NYSE:MO Community Fair Values as at Oct 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include MO.

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