Skip to Content

British American Tobacco PLC BATS

Morningstar Rating
GBX 2,507.00 +25.00 (1.01%)
View Full Chart
Unlock our analysis with Morningstar Investor

Company Report

British American Tobacco: Reaffirming Our Wide Moat and Fair Value Estimates; Shares Undervalued

We’ve reaffirmed our wide moat rating and fair value estimates of GBX 3,900 per share and $49 per ADR for British American Tobacco. This is based on our view that its growth will benefit from its next-generation products, but to a lesser extent than wide-moat peer Philip Morris International. In cigarettes, we continue to expect price increases will outpace declining volumes. Our valuation implies a 2024 price/adjusted earnings ratio of 11.5 times, enterprise value/adjusted EBITDA of 8 times, and 6% dividend yield. These multiples are at the middle of the tobacco peer group given middling long-term growth.

Price vs Fair Value

BATS is trading at a 375% premium.
Price
GBX 2,507.00
Fair Value
GBX 9,478.00
Uncertainty
Medium
1-Star Price
GBX 5,798.00
5-Star Price
GBX 7,391.00
Economic Moat
Zjyc
Capital Allocation
Wrkjydny

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.

Is it the right time to buy, sell, or hold?
Start a free trial of Morningstar Investor to unlock exclusive ratings and continuous analyst coverage to help you decide if BATS is a good fit for your portfolio.

News

Trading Information

Previous Close Price
GBX 2,482.00
Day Range
GBX 2,495.002,513.00
52-Week Range
GBX 2,233.002,742.00
Bid/Ask
GBX 2,450.00 / GBX 2,548.00
Market Cap
GBX 5.55 Tril
Volume/Avg
2.4 Mil / 5.0 Mil

Key Statistics

Price/Earnings (Normalized)
6.63
Price/Sales
2.05
Dividend Yield (Trailing)
9.30%
Dividend Yield (Forward)
9.39%
Total Yield
9.50%

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

Competitors

Valuation

Metric
BATS
IMBBY
PM
Price/Earnings (Normalized)
6.637.9917.28
Price/Book Value
1.104.12
Price/Sales
2.050.604.58
Price/Cash Flow
5.947.0015.46
Price/Earnings
BATS
IMBBY
PM

Financial Strength

Metric
BATS
IMBBY
PM
Quick Ratio
0.430.270.41
Current Ratio
0.910.640.94
Interest Coverage
−8.143.097.42
Quick Ratio
BATS
IMBBY
PM

Profitability

Metric
BATS
IMBBY
PM
Return on Assets (Normalized)
6.03%8.68%14.54%
Return on Equity (Normalized)
12.92%46.93%
Return on Invested Capital (Normalized)
9.03%21.76%25.19%
Return on Assets
BATS
IMBBY
PM
See how this stock stacks up to its competitors with Morningstar Investor

Tobacco Industry Comparables

1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Philip Morris International Inc
PM
VtndfqmjvPwq$164.7 Bil
Altria Group Inc
MO
TbrxSjrf$82.0 Bil
British American Tobacco PLC
BTAFF
Qptnnk$71.7 Bil
British American Tobacco PLC ADR
BTI
VgnyxwnqKylw$71.7 Bil
Japan Tobacco Inc ADR
JAPAY
Hkz$49.0 Bil
Japan Tobacco Inc
JAPAF
Lnjtf$49.0 Bil
Imperial Brands PLC
IMBBF
Rbl$23.0 Bil
Imperial Brands PLC ADR
IMBBY
NvvlchbBgm$23.0 Bil
Smoore International Holdings Ltd Ordinary Shares
SMORF
Mgtlnjs$6.8 Bil
PT Hanjaya Mandala Sampoerna Tbk
PHJMF
Mmncywc$5.1 Bil

Sponsor Center