It's a strange day when a tobacco company has far more success with its cigarette business than its reduced-risk products, but that's where Altria Group (MO -0.49%) finds itself today.

Altria just missed analyst revenue expectations in the second quarter while beating forecasts on earnings, but its investment in electronic-cigarette maker Juul Labs has been absolutely crushed by the Food and Drug Administration, which ordered its devices pulled from store shelves.

Person stubbing out a cigarette.

Image source: Getty Images.

Meanwhile, the U.S. International Trade Commission ruled that Philip Morris International (PM -1.01%) is prohibited from importing its IQOS heated tobacco device into the country. These were marketed and sold by Altria under its Marlboro Heat Sticks brand. And so Altria's harm-reduction efforts are, well, going up in smoke.

That's reflected in its stock price, which has lost one-fifth of its value over the past three months. The shares, which had been up 20% for the year in June, are now down almost 7% year to date. It's caused investors to wonder whether buying Altria's shares is worthwhile.

With smoking in a secular decline and Altria now the only major tobacco company without an e-cigarette on the market, let's see whether you'll get burned if you add this tobacco stock to your portfolio.

Getting stubbed out by market influences

Inflation is taking a toll too. While Altria's own costs are rising as a result, its customers are also having to contend with rocketing food and energy costs, which cuts into their limited disposable income and causes them to prioritize what they buy. 

Revenue fell 5.7% in the first quarter to $6.5 billion, though that does include the impact of Altria's sale of its wine business last October. Net of excise taxes, revenue was down 4.3% to $5.4 billion.

Adjusted profits, though, were up almost 3% to $1.26 per share, as Altria has repurchased more than 21 million shares in the first six months of the year. While net profits were down, that was almost all due to investments Altria has made in Juul; Anheuser-Busch InBev, the maker of Budweiser beer; and marijuana producer Cronos.

Although the brewer has delivered a solid performance, it had to completely write off its Russian investments -- and the higher foreign currency exchange rates caused the fair value of these investments to temporarily dip below their carrying value, resulting in non-cash impairment charges. Cronos also dragged down performance, resulting in a $120 million loss on the equity investment in the quarter.

The real crushing blow, though, was Juul, which saw Altria take yet another 35% devaluation to its $13.4 billion investment in the company. It now puts the price tag at just $450 million because of the decreased likelihood the FDA will reverse its decision on Juul products (the agency did temporarily suspend its ban so it could review its decision). Juul is expected to declare bankruptcy if the FDA upholds its ban.

Rising from the ashes

It certainly seems a bleak landscape, but Altria does have a lot going for it, too.

It could start investing again in its own e-cig products, since its Juul investment prevents it from doing so unless the value of the deal decreased by 90% or more. Since it already has experience with such products through its MarkTen brand it shelved at the time, it could relaunch those or even acquire an existing product.

Altria also has made investments in other smokeless tobacco options, including snuff, snus, and nicotine pouches. It owns the Copenhagen and Skoal brands of snuff and snus, and several years ago the On! brand of nicotine pouches.

Its oral tobacco products have a near 47% share of the market with the 200-year-old Copenhagen brand as the leader with a 27.2% share. The On! brand has grown to almost 5% of the market. Altria's Marlboro brand of cigarettes has been the market leader for 45 years, and it continues to own nearly half of the traditional cigarette market.

A smoldering opportunity

Altria is financially strong and its stock is very cheap, trading at just eight times next year's earnings. At around $44 a share, the stock goes for what it did back in 2015 -- and during the early stages of the pandemic, when the market collapsed.

With a dividend that yields a lush 8.1% and has increased annually for more than 50 years -- making it a Dividend King -- Altria's stock is an attractive buy at these prices.