Tax reform has had a monumental impact on a number of stocks, and Altria Group (MO -0.92%) is just one of the many beneficiaries that have seen their earnings climb in response to the new tax laws. Even as it continues to move toward more innovative strategies for future growth, Altria has also worked hard to cement its position as the market leader in cigarettes in the U.S. market despite the best efforts of its biggest domestic rival.

Coming into Thursday's fourth-quarter financial report, Altria investors had high hopes that the company would manage to keep raising its profits even in the face of ongoing challenges. The tobacco giant followed through with that objective, and it gave an extremely favorable outlook for the coming year. Let's take a closer look at Altria and what its results say about the future of the industry.

Altria CEO Marty Barrington standing in front of a glass window at the company's headquarters.

CEO Marty Barrington is retiring later this year. Image source: Altria.

How Altria got more profitable

Altria's fourth-quarter results extended its streak of making more from less. Revenue net of excise taxes fell again, dropping 0.4% to $4.71 billion and missing out on investor expectations for a slight top-line rise. Adjusted net income picked up 32% to $1.74 billion, and that produced adjusted earnings of $0.91 per share, easily exceeding the consensus forecast for $0.80 per share.

Extraordinary items affected Altria's comparable results in both directions. On one hand, tax reform was a huge net positive for Altria to finish the year, as the boost that the company got from revaluing deferred tax liabilities at the reduced corporate tax rate dramatically outweighed the deemed repatriation tax it will have to pay as a result of its holdings of Anheuser-Busch InBev (BUD -1.77%). Yet GAAP net income sank because last year's fourth quarter included a huge capital gain on the sale of Altria's stake in SABMiller to A-B InBev.

Fundamentally, Altria keeps facing many of the same challenges as it seeks to find growth. In the smokeable products segment, revenue fell 1% net of excise tax, with a 9% plunge in domestic cigarette shipment volumes creating most the downward pressure on the segment's top line. Strict cost controls and higher pricing helped to lift adjusted operating company income by nearly 6% for the segment, and lower spending on promotional investment helped to boost margin figures by more than 3 percentage points to nearly 50%. Yet market share for the key Marlboro brand fell 0.7 percentage points, pulling down the company's overall share for the quarter to just 50.3%.

The smokeless products segment, by contrast, had extraordinary growth. Revenue net of excise tax soared 11%, resulting in a 27% boost to adjusted operating company income. The company pointed to a slight decline in shipment volume, but higher pricing and a substantial drop in certain costs related to facilities consolidation supported the segment's profitability. Market share fell more than a percentage point, but the key Copenhagen brand remained stable and continues to lead the division forward.

The wine segment remained subdued. Altria reported a 9% drop in revenue net of excise tax, and adjusted operating company income climbed at a less than 2% pace due largely to a nearly 10% drop in shipment volume during the quarter.

Can Altria keep finding ways to grow?

CEO Marty Barrington was happy with Altria's gains and strategic victories. "That success was built on our core tobacco businesses," Barrington said, "which delivered strong income growth and expanded their already high margins despite a year with some unique challenges." The CEO also noted that the acquisition of super-premium cigarette maker Nat Sherman helped to diversify Altria's exposure to the tobacco market.

Altria pointed to the favorable new tax laws as a way to bolster growth. In Barrington's words, "The passage of federal tax reform strengthens our financial capability to further invest in our businesses and reward our shareholders." That accompanied a forecast for earnings growth of 15% to 19%, or roughly double what it has traditionally looked for on an annual basis.

Yet going forward, Altria will have to find success without its longtime leader. Barrington said that he will retire later this year after six years of service, and Altria named current COO Howard Willard to become Barrington's successor as CEO as of May 17, after the completion of the scheduled annual shareholder meeting. Willard will also serve as chair of the Altria board, and CFO Billy Gifford was named vice chair to go with his chief financial officer role.

Altria investors seemed to be a bit nervous about the transition, and shares fell 1% in morning trading on Thursday following the announcement. The key question is whether Altria can navigate its way through poor conditions in the cigarette market to find sustainable growth in the future. Despite a tax-related boost, it's up to Altria to make sure it can maximize its profit to take greater advantage of lower tax rates throughout 2018 and beyond.