One thing we can say for sure is that Altria (NYSE: MO) is a controversial stock. While there are plenty of companies whose products may not be terribly healthy for their customers, Altria's products take that to a whole other level.

Not that it's alone. Spinoff Philip Morris International (NYSE: PM), along with fellow tobacco companies Lorillard (NYSE: LO), Reynolds American (NYSE: RAI), and British American Tobacco (NYSE: BTI) -- to name a few -- are in the same boat.

Of course, another thing we can say for sure is that Altria's stock has delivered absolutely amazing returns for its shareholders.

But we can't put past returns in the bank today. Is Altria still worth buying? To answer that question, we first need to get an idea of what its shares are really worth.

A beautiful day in the neighborhood
To start, let's check out how Altria's valuation compares to that of similar companies:

Company

Total Enterprise Value / Trailing Revenue

Price / Trailing Earnings

Total Enterprise Value / Trailing EBITDA

Forward PEG

Altria

3.7

14.6

8.8

1.9

British American Tobacco

3.9

17.0

9.9

1.4

Coca-Cola (NYSE: KO)

4.4

18.6

12.1

1.9

Colgate-Palmolive (NYSE: CL)

2.6

18.8

9.9

1.6

Lorillard

3.2

13.1

7.0

2.0

Philip Morris International

4.4

15.2

10

1.4

Reynolds American

2.4

14.3

7.5

2.0

Average*

3.5

16.2

9.4

1.7

Source: Capital IQ, a Standard & Poor's company, and Yahoo! Finance.
*Average excludes Altria.

Using each of those averages to back into a stock price for Altria, and then taking the average across those results, we can come up with an estimated price per share of right around $24. This would suggest that today's price of right around $24 is a pretty fair price.

A comparable company analysis like this can sometimes raise as many questions as it answers, though. For instance, is the entire group properly valued? A supposedly fairly valued -- or even overvalued -- stock among a bunch of other undervalued stocks may actually be an undervalued stock, and vice versa.

Additionally, while these companies are comparable, they're certainly not all the same. A handful of the companies above are also tobacco companies, but none has the same kind of brand power as Altria's Marlboro. And then we have Coke and Colgate, which are comparable because they're brand-driven, consumer staples companies, but they don't have the same kind of legal overhang that tobacco stocks do.

So with all that in mind, it's best to combine comparable company analysis with another valuation technique.

Collecting the cash flow
A discounted cash flow (DCF) analysis projects free cash flow over the next 10 years, then discounts the tally from each of those years back to what it would be worth today (since a dollar tomorrow is worth less to us than a dollar today).

Because DCF is based largely on estimates (aka guesses) and it attempts to predict the future, it can be a fickle beast; so its results are best used as guideposts rather than written-in-stone answers.

For Altria's DCF, I used the following assumptions:

2010 Unlevered Free Cash Flow

$4.5 billion

FCF Growth 2010-2014

6.7%

FCF Growth 2014-2019

3.4%

Terminal Growth

3.0%

Market Equity as a Percentage of Total Capitalization

81.0%

Cost of Equity

12.0%

Cost of Debt

9.1%

Weighted Average Cost of Capital

10.8%

Source: Capital IQ, a Standard & Poor's company, Yahoo! Finance, author's estimates.

While most of this is pretty standard fare when it comes to DCFs, the academically inclined would probably balk at the way I set the cost of equity. In a "classic" DCF, the cost of equity is set based on an equation that uses beta -- a measure of how volatile a stock is versus the rest of the market -- and a few other numbers that I tend to thumb my nose at.

But when you get right down to it, the cost of equity is the rate of return that investors demand to invest in the equity of that company. So I generally set the cost of equity equal to the rate of return that I'd like to see from that stock.

Based on the assumptions above, a simple DCF model spits out a per-share value of $28 and change for Altria's stock. This seems to suggest that the stock could actually be undervalued.

Do we have a winner?
The valuations that we've done here are pretty simple and, particularly when it comes to the DCF, investors would be well advised to play with the numbers further before making a final decision on Altria's stock.

That said, with a price range of $24 to $28, it looks like the stock may be slightly undervalued. At the midpoint of that range, we'd peg the stock's fair value at $26, which is 7% higher than today's price.

Interestingly, Altria's high dividend payout ratio also makes the stock an ideal candidate for a third valuation method -- the dividend discount model. When I do a quick run-through of that valuation method, I get a result that's nearly identical to the $26 midpoint of the two methods above.

The opportunity at Altria is attractive enough that my fellow Fool Anand Chokkavelu made it his 11 O'Clock Stock pick, and The Motley Fool sunk real money into Altria shares. Of course, the stock was also more than 10% lower at the time.

I think investors will probably be pretty happy with the returns they'll see from Altria at today's price. However, those looking for a real bargain are better off holding off boarding the very smoky Altria train until the price cools off a bit.

Do you agree that Altria could be a good buy right now? Head down to the comments section and share your thoughts.

This exercise would be completely meaningless if stock picking were dead. Of course, I don't believe stock picking is even close to dead.

Coca-Cola is a Motley Fool Inside Value selection. Philip Morris International is a Motley Fool Global Gains pick. Coca-Cola is a Motley Fool Income Investor pick. The Fool owns shares of Altria, Coca-Cola, and Philip Morris International. Try any of our Foolish newsletter services free for 30 days

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. 

Fool contributor Matt Koppenheffer owns shares of Philip Morris International and Coca-Cola, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.