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British American Tobacco PLC BATS

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Stock XLON Rating as of
GBX 2,774.00 +12.00 (0.43%)
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As of Delayed Price Closed

Company Report

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British American Tobacco's Next-Generation Portfolio Is Unfocused but Should Still Deliver Growth

Kristoffer Inton

British American Tobacco is the world’s second-largest tobacco company by volume, with cigarette sales to over 180 countries. But with global cigarette consumption declining about 5% per year, BAT has invested in several next-generation products that can deliver nicotine with reduced risk. This strategy makes sense, but we think the firm has placed too many bets, leading to it becoming a “jack of all trades, master of none.”

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Price vs Fair Value

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BATS is trading at a 448% premium.
Price
GBX 2,774.00
Fair Value
GBX 6,627.00
Uncertainty
Medium
1-Star Price
GBX 3,643.00
5-Star Price
GBX 2,759.00
Economic Moat
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Capital Allocation
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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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News

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Trading Information

Previous Close Price
GBX 2,762.00
Day Range
GBX 2,752.00–2,790.00
52-Week Range
GBX 2,233.00–2,994.00
Bid/Ask
GBX 2,700.00 / GBX 2,880.00
Market Cap
GBX 6.13 Tril
Volume/Avg
4.6 Mil / 3.7 Mil

Key Statistics

Price/Earnings (Normalized)
7.96
Price/Sales
2.36
Dividend Yield (Trailing)
8.45%
Dividend Yield (Forward)
8.49%
Total Yield
9.20%

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 heated 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
MO
IMBBY
Price/Earnings (Normalized)
 7.9610.388.58
Price/Book Value
 1.17—4.42
Price/Sales
 2.364.410.65
Price/Cash Flow
 6.8810.037.51
Price/Earnings
BATS
MO
IMBBY

Financial Strength

Metric
BATS
MO
IMBBY
Quick Ratio
 0.570.280.27
Current Ratio
 0.880.450.64
Interest Coverage
 −12.3412.323.09
Quick Ratio
BATS
MO
IMBBY

Profitability

Metric
BATS
MO
IMBBY
Return on Assets (Normalized)
 6.34%23.59%8.68%
Return on Equity (Normalized)
 14.01%—46.93%
Return on Invested Capital (Normalized)
 8.94%42.77%21.76%
Return on Assets
BATS
MO
IMBBY

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
XmxcfjhdqnVtdhj$187.5 Bil
 Altria Group Inc
MO
DqqkbYxnjk$87.1 Bil
 British American Tobacco PLC
BTAFF
—Bvdzq$82.2 Bil
 British American Tobacco PLC ADR
BTI
GypdlzrscQlntj$82.2 Bil
 Japan Tobacco Inc ADR
JAPAY
—Rdxy$52.8 Bil
 Japan Tobacco Inc
JAPAF
—Fqjg$52.8 Bil
 Imperial Brands PLC
IMBBF
—Jtlqg$24.7 Bil
 Imperial Brands PLC ADR
IMBBY
JbjbtrvvNwnz$24.7 Bil
 PT Hanjaya Mandala Sampoerna Tbk
PHJMF
—Pjmtrf$5.9 Bil
 RLX Technology Inc ADR
RLX
—Trfx$2.6 Bil

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