Altria Stock Slides on Earnings. What’s Spooking the Market.

Altria Group, the maker of Marlboro cigarettes, noted that revenue attributed to smokeable products decreased in the third quarter. (Getty Images)

Key Points

• Altria’s revenue decreased 3% to $6.07 billion, primarily due to lower net revenues in the smokeable products segment.
• Marlboro product shipment volume fell 11.7%, and overall domestic cigarette volume declined 8.2% in the quarter.
• The company expanded its share repurchase program to $2 billion from $1 billion, now expiring on December 31, 2026.

Altria Group stock declined sharply after reporting earnings on Thursday as the maker of Marlboro cigarettes highlighted falling cigarette shipment volumes and lower revenue for its smokeable products.

Adjusted earnings of $1.45 a share came in slightly above the $1.44 analysts had anticipated. Revenue of $6.07 billion was ahead of the $5.29 billion Wall Street had forecast, but it declined 3% from the same period last year, which Altria said was “primarily driven by lower net revenues in the smokeable products segment.”

The company raised the low end of its adjusted earnings guidance range to $5.37 a share from $5.35, while maintaining the high end at $5.45. Analysts are looking for $5.43 a share.

CEO Billy Gifford insisted the company’s core tobacco businesses “remained resilient” as Altria simultaneously built up its smoke-free portfolio, which includes products such as nicotine pouches and smokeless tobacco.

His reassurance came even as the shipment volume of Marlboro products fell 11.7% in the quarter. For all domestic cigarette products, volume declined 8.2%.

Beyond retail share losses, Altria attributed the decrease to industry trends such as the spread of flavored disposable e-vapor products, “the majority of which we believe have evaded the regulatory process,” the company added.

Altria stock tumbled 7.4% on Thursday, while Philip Morris International traded flat after rising earlier in the session. The benchmark S&P 500 index was down 0.3%.

The difference could have something to do with PMI’s move into smoke-free products such as Zyn nicotine pouches and vape pods. PMI has generally been able to sustain the industry-wide shift in consumer preferences, as customers increasingly favor alternatives to traditional cigarettes. On its latest earnings call, the company touted “outstanding volume growth” across all three of its flagship smoke-free brands. PMI also notched more than $3 billion in quarterly smoke-free gross profit for the first time.

The company spun off from Altria in 2008. Philip Morris USA, which operates separately from PMI, is a subsidiary of Altria.

Altria’s board on Wednesday authorized the expansion of its existing share-repurchase program to $2 billion from $1 billion. The program will expire on Dec. 31, 2026, Altria said. In the third quarter, the company repurchased 1.9 million shares at an average price of $60.13, for a total cost of $112 million.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com