Altria Group, Inc. (MO) had a mixed Thursday morning after posting fourth-quarter results that showed the ongoing challenges facing the tobacco giant. Shares dropped over 3% as investors digested an earnings miss, even though the company managed to exceed revenue expectations.

The story here is pretty straightforward: smoking is getting more expensive to sell. Altria reported adjusted earnings of $1.30 per share for the quarter, falling just short of the $1.32 consensus estimate. Revenue came in at $5.846 billion, down 2.1% from the prior year but handily beating the $5.028 billion analysts were expecting.

The Cigarette Problem

The main drag came from smokeable products, where Altria saw net revenues decline 2.7%. The culprit? Lower shipment volumes combined with higher promotional spending, which ate into margins despite the company's continued ability to raise prices. When you strip out excise taxes, smokeable revenues still fell 1.1%.

Marlboro, the crown jewel of Altria's portfolio, is feeling the pressure. Its retail share of the total cigarette category dropped to 39.8%, down 1.5 percentage points year-over-year and 0.6 points from the previous quarter. Within the premium segment specifically, Marlboro held 59.2% share, slipping 0.1 points from last year and 0.4 points sequentially.

Bright Spots and Balance Sheet

Oral tobacco provided some relief, with net revenues climbing 2.0% thanks to pricing power. That increase came despite lower shipment volumes and an unfavorable product mix. Excluding excise taxes, oral tobacco revenues actually grew a healthier 2.9%.

The company's gross profit inched up 0.7% to $3.631 billion, though operating income took a significant hit, plummeting 40.9% to $1.753 billion. Altria closed the quarter with $4.474 billion in cash and equivalents on hand.

Looking Ahead

For fiscal 2026, Altria is guiding for adjusted earnings between $5.56 and $5.72 per share. The midpoint sits right around the $5.58 analyst consensus. Management noted that earnings growth will be back-loaded into the second half of the year, driven by what they expect to be a progressive increase in cigarette import and export activity as 2026 unfolds.

The company also expects its 2026 adjusted effective tax rate to land between 22.5% and 23.5%, with capital expenditures of $300 million to $375 million and depreciation and amortization expenses of approximately $225 million.

Altria shares were trading down 3.19% at $61.11 following the earnings release.