Why the Smartest Investors Are Buying Philip Morris International Stock and Not Altria

Key Points

• In some ways, Altria and Philip Morris International are tied at the hip.

• The two tobacco businesses couldn't be more different in some key ways.

• Smart investors are avoiding one of these companies but love the other.

• 10 stocks we like better than Altria Group ›

Altria (NYSE: MO) is an iconic consumer staples maker that has shifted and changed over the years. Today it is largely a tobacco stock, though it has investments in a beverage maker. Philip Morris International (NYSE: PM) shares some of the storied history of Altria, but the smartest investors know that its business is better.

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How are Altria and Philip Morris related?

Altria's most important cigarette brand is Marlboro. Marlboro has a huge 41% market share in the North American market. Add in the company's other, much smaller, brands, and Altria's market share rises to around 45%. Marlboro is also one of Philip Morris International's most important cigarette brands.

The reason for this is that Altria spun off its international operations to create Philip Morris International. So Altria controls the brands in North America and Philip Morris controls them everywhere else. This is an important distinction for any investor considering buying a tobacco stock. And it is one of the reasons why Philip Morris is performing better as a stock and business than Altria.

What's going on with Altria?

In the first quarter of 2025, Altria's cigarette volume fell 13.7%, continuing a long downward trend. Marlboro lost a percentage point of market share, with other brands doing even worse. Despite being a consumer staples giant, with a product that tends to have huge brand loyalty, the industry trends in the U.S. market are taking a huge toll on Altria's business.

Altria knows it has a problem and has been trying to find a solution. Only it has made a number of large missteps, costing investors billions of dollars in write-downs. Altria simply isn't executing very well as it works through what is likely to be an increasingly challenging market environment.

Philip Morris, on the other hand, is executing very well. The foreign markets it serves appear to be less challenged, noting that cigarette volumes actually increased in the first quarter of 2025. That helped lead to a modest 0.4-percentage-point market share gain for the company. Thus, Philip Morris' foundation is stronger.

That said, the real standout for Philip Morris is the growth of its non-cigarette operations. In the first quarter, the company's smoke-free business generated 42% of its revenue and 44% of its profits. Some of its strongest non-cigarette businesses are vapes and pouches. Its pouches compete in the U.S. market, meaning Philip Morris is now a competitor to its former owner. And one that appears to be running rings around Altria as that company struggles to move beyond cigarettes.

Philip Morris is in a much better position

Investors who buy Altria are betting the tobacco giant can change with the times and find non-cigarette businesses to replace its slowly declining core. Or, to put it another way, if you buy Altria today you are hoping it can achieve the same success as Philip Morris. Most investors will probably be better off avoiding the risk that Altria keeps stumbling and just buying the better-performing tobacco company.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.