QS Research · Michael Burry's Scion Capital analyst template · 2006
ALTRIA GROUP, INC. (MO)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case none · downside -12% · upside +4%
At today's 6.34x EV/Sales (N27) on the same $23.52B TTM revenue base as section 13 (N11), EV is $149.16B (N26), less $22.54B net debt (N24) gives $126.62B equity (N9), or $76.12 (N1): that is the 0% base. I do not use section 13's peer-multiple downside/upside because no cited non-valuation catalyst justifies moving off today's multiple; at 6.34x, a 10% revenue decline gives $21.17B revenue, $134.20B EV, $111.66B equity and $67.13/share (-11.8%), while +3.6% revenue gives $24.37B, $154.49B EV, $131.95B equity and $79.32/share (+4.2%). The market is not missing a depressed price: shares are near the 52-week high, +32.9% in one year, with P/E 15.6x and negative equity. The cash yield and guidance are real, but the base case is not +30% and the risk/reward is not compelling; pass.
Key numbers
- Share price: $76.12
- Market cap: $126.62B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $23.52B
- EV / EBITDA (TTM): 13.2x
- P/E (TTM): 15.6x
The 15 boxes
- ✓ 1. Long-form business notes
Altria makes money selling tobacco and nicotine products—cigarettes, machine-made large cigars, MST, oral nicotine pouches and e-vapor—mainly in the U.S. to wholesalers and large retailers. In FY2025 its reportable segments were smokeable products, oral tobacco products and e-vapor products; by contrast the FY2020 10-K had smokeable, oral and wine segments and included Ste. Michelle wine and PMCC finance assets. Between FY2020 and FY2025 revenue fell from $26.15B to $23.28B while gross profit rose from $13.02B to $14.54B, operating income fell from $10.87B to $9.90B and operating cash flow rose from $8.38B to $9.29B; cigarette shipment volume fell from 101.4B units to 61.8B.
- ○ 2. Competitive advantage
The advantage shows up as a widening spread between a shrinking top line and a growing gross profit: revenue fell from $26.15B in FY2020 to $23.28B in FY2025 while gross profit rose from $13.02B to $14.54B, and the business converts nearly all of it to cash on negligible capex ($216M against $9.29B operating cash flow in FY2025). It is a premium-brand franchise (Marlboro, Copenhagen, Skoal) whose named competitors are lower-priced manufacturers that are not parties to the healthcare cost recovery settlements, plus, in e-vapor, illicit flavored disposables that the 10-K says now make up the majority of the category. The advantage is durable in the legacy categories and unproven in smoke-free: 2025 impairments of e-vapor goodwill and intangibles, an ITC ban on NJOY ACE that stays in effect during appeal, and operating income down to $9.90B in FY2025 from an $11.92B FY2022 peak. Return measures are muddied by negative total equity of -$3.50B at FY2025 after buybacks.
- ✓ 3. 10-Q takeaways
Q3 2026 sales grew modestly: net revenues +1.0% to $6,132 million and revenues net of excise taxes +3.6% to $5,441 million, while adjusted diluted EPS rose 4.8% to $1.52. Smokeable pricing and duty-drawback refunds offset an estimated 4% domestic cigarette shipment-volume decline; adjusted smokeable OCI margin was 64.5%. Buybacks were $400 million in Q3 and $735 million in the first nine months, and the board added $1 billion to the program. FY2026 adjusted diluted EPS guidance was raised to $5.66-$5.74, up 4.5%-6.0% from the $5.42 2025 base, and the computed risk-factor diff flags 10 new or rewritten paragraphs.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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