UKRAINE - 2021/08/12: In this photo illustration an Altria Group, Inc. logo seen displayed on a ... [+] smartphone screen and in the background. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images)
We think that Turning Point Brands stock (NYSE: TPB), a relatively small tobacco company, currently is a better pick compared to the tobacco giant Altria stock (NYSE: MO), given Turning Point Brand’s comparatively lower valuation of 0.8x trailing revenues, vs. 3.2x for Altria. This gap in the valuation can primarily be attributed to Altria’s superior profitability.
If we look at stock returns, Altria, despite a fall of 3% year-to-date, has outperformed Turning Point Brands, which is down 36%, as well as the broader markets, with the S&P500 index falling 13%. There is more to the comparison, and in the sections below, we discuss why we believe TPB stock will offer better returns than MO stock in the next three years. We compare a slew of factors such as historical revenue growth, returns, and valuation multiple in an interactive dashboard analysis of Altria vs. Turning Point Brands: Which Stock Is A Better Bet? Parts of the analysis are summarized below.
1. Turning Point Brands’ Revenue Growth Is Better
Annual Growth Forecast - MO vs. TPB
3. The Net of It All
Stock Return Forecast - MO vs. TPB
While TPB stock may outperform MO, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Philip Morris vs. Coca-Cola.
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MO & TPB Returns Compared With Trefis Multi-Strategy Portfolio
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