Altria Group, Inc.MONYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $159.31 per share(market-calibrated)

+131.9%

Upside to Fair Value

Current

$68.69

Pure Model

$170.25

Fair Value

$159.31

Bull Case

$199.59

Bear Case

$145.52

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $170.25.

What's Driving This Ratingfor MO

✓

CapEx already efficient

CapEx at 0.92% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 79.67% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 0.37% revenue growth, fading to 2.50% by Year 10. Revenue reaches $23.6B (vs $20.1B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 72.96% indicates efficient cash generation. FCF reaches $13.9B by Year 10 (59.07% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.50

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.74%

Cost of Debt

Pre-tax Cost of Debt4.49%

Tax Rate26.01%

After-tax Cost of Debt3.32%

Equity Weight (E/V)81.75%

Debt Weight (D/V)18.25%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (81.75% × 6.74%) + (18.25% × 3.32%)

= 6.11%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$20.2B	$20.3B	$20.9B	$21.9B	$23.6B
EBIT	$16.1B	$16.2B	$16.6B	$17.5B	$18.8B
Tax	$4.2B	$4.2B	$4.3B	$4.5B	$4.9B
NOPAT	$11.9B	$12.0B	$12.3B	$12.9B	$13.9B
+ Depreciation	$260M	$261M	$268M	$282M	$303M
- Capex	$186M	$187M	$192M	$202M	$217M
- Δ NWC	$8M	$6M	$51M	$53M	$58M
Free Cash Flow	$12.0B	$12.0B	$12.3B	$12.9B	$13.9B
Discount Factor	0.942	0.837	0.743	0.660	0.552
Present Value	$11.3B	$10.1B	$9.2B	$8.5B	$7.7B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$13.9B

Terminal Growth Rate2.50%

WACC6.11%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$395.3B

PV of Terminal Value$218.4B

Exit Multiple Method

Year 10 EBITDA$19.1B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$382.0B

PV of Terminal Value$211.0B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$92.0B

PV of Terminal Value$218.4B

Enterprise Value$310.4B

(-) Net Debt$21.2B

Equity Value$289.2B

Shares Outstanding1.7B

Price per Share$172.45

Exit Multiple Method

PV of Projected FCFs$92.0B

PV of Terminal Value$211.0B

Enterprise Value$303.0B

(-) Net Debt$21.2B

Equity Value$281.8B

Shares Outstanding1.7B

Price per Share$168.05

Pure Model Fair Value

$170.25

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.11%	$231.91	$258.09	$257.22	$246.57	$236.42
5.11%	$185.03	$196.82	$213.13	$237.15	$236.42
6.11%	$155.63	$162.05	$170.25	$181.08	$196.05
7.11%	$134.72	$138.62	$143.36	$149.26	$156.79
8.11%	$118.68	$121.23	$124.23	$127.81	$132.18

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$145.52

111.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.62

Base Case

$170.25

147.9% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.50

Bull Case

$199.59

190.6% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.42

Key Assumptions & Drivers• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth0.37%

Year 3 Revenue Growth0.29%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin79.67%

Tax Rate26.01%

Historical Capex / Rev0.92%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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