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British American Tobacco PLC BATS

Morningstar Rating
GBX 2,488.00 +28.00 (1.14%)
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Company Report

BAT: First-Half 2024 Shaping Up Within Expectations; Shares Very Undervalued

Wide-moat British American Tobacco's pre-close first-half trading update provided few details but reaffirmed most of its previously issued guidance. The company continues to expect low-single-digit revenue and adjusted profit growth on an organic and constant currency basis for 2024, in line with our forecasts of 2% and 4%, respectively. Additionally, it expects performance to be weighted toward the back half of the year, especially for revenue from new categories. We maintain our GBX 3,900 per share and $49 per ADR fair value estimates and view shares as very undervalued.

Price vs Fair Value

BATS is trading at a 775% premium.
Price
GBX 2,488.00
Fair Value
GBX 9,118.00
Uncertainty
Medium
1-Star Price
GBX 6,317.00
5-Star Price
GBX 1,225.00
Economic Moat
Qcx
Capital Allocation
Dvlvtfpy

Bulls Say, Bears Say

Bulls

The consolidation of Reynolds America gives BAT more exposure to the US market, a high-margin market with headroom to raise prices and optionality in the heated tobacco market.

Bears

BAT has lost first-mover advantage to PMI in heated tobacco, a promising tobacco alternative to cigarettes.

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News

Trading Information

Previous Close Price
GBX 2,460.00
Day Range
GBX 2,445.002,497.00
52-Week Range
GBX 2,233.002,742.00
Bid/Ask
GBX 2,410.00 / GBX 2,500.00
Market Cap
GBX 5.53 Tril
Volume/Avg
9.6 Mil / 6.4 Mil

Key Statistics

Price/Earnings (Normalized)
6.58
Price/Sales
2.03
Dividend Yield (Trailing)
9.33%
Dividend Yield (Forward)
9.47%
Total Yield
9.53%

Company Profile

Following the acquisition of Reynolds American, British American Tobacco is neck-and-neck with Philip Morris International to be the largest listed Global tobacco company--slightly larger than PMI on net revenue, but slightly smaller on total tobacco volume. British American's Global Drive Brands are Dunhill, Kent, Pall Mall, Lucky Strike, and Rothmans, and it also owns Newport and Camel in the us. The firm also sells vapor e-cigarettes, primarily its Vuse brand, heated tobacco, with Glo, as well Velo modern oral tobacco products. The company holds 29% of ITC Limited, the leading Indian cigarette-maker.
Sector
Consumer Defensive
Industry
Tobacco
Stock Style Box
Large Value
Total Number of Employees
46,725

Competitors

Valuation

Metric
BATS
2914
IMBBY
Price/Earnings (Normalized)
6.5814.867.64
Price/Book Value
1.091.973.94
Price/Sales
2.032.690.58
Price/Cash Flow
5.8912.216.69
Price/Earnings
BATS
2914
IMBBY

Financial Strength

Metric
BATS
2914
IMBBY
Quick Ratio
0.430.850.27
Current Ratio
0.911.830.64
Interest Coverage
−8.147.263.09
Quick Ratio
BATS
2914
IMBBY

Profitability

Metric
BATS
2914
IMBBY
Return on Assets (Normalized)
6.03%7.08%8.68%
Return on Equity (Normalized)
12.92%12.91%46.93%
Return on Invested Capital (Normalized)
9.03%10.63%21.76%
Return on Assets
BATS
2914
IMBBY
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Tobacco Industry Comparables

1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Philip Morris International Inc
PM
JdmfswszdDzwy$155.3 Bil
Altria Group Inc
MO
ZhlqlCfgm$78.6 Bil
British American Tobacco PLC
BTAFF
Sdtqpd$70.0 Bil
British American Tobacco PLC ADR
BTI
RvrzmpdtLkvg$70.0 Bil
Japan Tobacco Inc ADR
JAPAY
Pgvn$49.3 Bil
Japan Tobacco Inc
JAPAF
Vjfz$49.3 Bil
Imperial Brands PLC
IMBBF
Yhn$22.1 Bil
Imperial Brands PLC ADR
IMBBY
ZfpjxjqpYdptj$22.1 Bil
Smoore International Holdings Ltd Ordinary Shares
SMORF
Csyxyjl$7.4 Bil
PT Hanjaya Mandala Sampoerna Tbk
PHJMF
Vdcrdw$4.9 Bil

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