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British American Tobacco PLC BATS

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Stock XLON Rating as of
GBX 2,729.00 +16.00 (0.59%)
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Company Report

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British American Tobacco Earnings: First Half Shaping Up Within Expectations; Shares Undervalued

Kristoffer Inton

Wide-moat British American Tobacco reported an organic revenue decline of 0.8% and a flat adjusted organic operating margin of 44.9%. The company continues to believe that results will improve in the second half, driven by new products and investments in its US commercial distribution. Management reaffirmed full-year guidance for low-single-digit organic constant-currency revenue growth and low-single-digit organic adjusted-profit growth, inclusive of expected currency headwinds of about 2%.

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Price vs Fair Value

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BATS is trading at a 116% premium.
Price
GBX 2,729.00
Fair Value
GBX 7,766.00
Uncertainty
Medium
1-Star Price
GBX 1,933.00
5-Star Price
GBX 3,744.00
Economic Moat
Fmz
Capital Allocation
Fmpfdrm

Bulls Say, Bears Say

Bulls

The acquisition of Reynolds American gave BAT arguably the second-best position in the US cigarette market, a high-margin market with headroom to raise prices and optionality in the heated tobacco market.

Bears

British American Tobacco’s leadership in vaping matters little given the market is likely to continue to shrink.

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Trading Information

Previous Close Price
GBX 2,713.00
Day Range
GBX 2,698.00–2,740.00
52-Week Range
GBX 2,233.00–2,742.00
Bid/Ask
GBX 2,700.00 / GBX 2,750.00
Market Cap
GBX 6.04 Tril
Volume/Avg
4.8 Mil / 4.6 Mil

Key Statistics

Price/Earnings (Normalized)
7.83
Price/Sales
2.32
Dividend Yield (Trailing)
8.55%
Dividend Yield (Forward)
8.63%
Total Yield
9.31%

Company Profile

The second largest tobacco company by volume, British American Tobacco sold 555 billion cigarettes in 2023. Its leading brands are Dunhill, Kent, Pall Mall, Lucky Strike, and Rothmans in cigarettes. Its ownership of the Camel, Natural American Spirit, and Newport brands are limited to the us. In next-generation products, the company has the Vuse brand in vaping, Glo in hated tobacco, and Velo in modern oral tobacco. The company also owns a 25.5% stake in ITC limited, the largest Indian cigarette company.
Sector
Consumer Defensive
Industry
Tobacco
Stock Style Box
Large Value
Total Number of Employees
46,725
Website
https://www.bat.com

Competitors

Valuation

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Metric
BATS
IMBBY
PM
Price/Earnings (Normalized)
 7.838.2018.52
Price/Book Value
 1.154.23—
Price/Sales
 2.320.624.83
Price/Cash Flow
 6.767.1816.40
Price/Earnings
BATS
IMBBY
PM

Financial Strength

Metric
BATS
IMBBY
PM
Quick Ratio
 0.570.270.44
Current Ratio
 0.880.640.94
Interest Coverage
 −12.343.097.81
Quick Ratio
BATS
IMBBY
PM

Profitability

Metric
BATS
IMBBY
PM
Return on Assets (Normalized)
 6.34%8.68%15.70%
Return on Equity (Normalized)
 14.01%46.93%—
Return on Invested Capital (Normalized)
 8.94%21.76%27.22%
Return on Assets
BATS
IMBBY
PM
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Tobacco Industry Comparables

Screen With Investor
1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Philip Morris International Inc
PM
FpqryprntjFjmb$176.3 Bil
 Altria Group Inc
MO
MyqfCsp$86.6 Bil
 British American Tobacco PLC
BTAFF
—Vcgctqw$77.6 Bil
 British American Tobacco PLC ADR
BTI
GzjgddtsTlwz$77.6 Bil
 Japan Tobacco Inc
JAPAF
—Byzkt$50.0 Bil
 Japan Tobacco Inc ADR
JAPAY
—Mrqgb$50.0 Bil
 Imperial Brands PLC
IMBBF
—Qmprly$23.5 Bil
 Imperial Brands PLC ADR
IMBBY
JslkstdjYth$23.5 Bil
 Smoore International Holdings Ltd Ordinary Shares
SMORF
—Nrxygt$6.8 Bil
 PT Hanjaya Mandala Sampoerna Tbk
PHJMF
—Vrqmbt$4.8 Bil

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