Last Updated: 14 Nov 2024
Executive Summary
British American Tobacco p.l.c. (BTI) is a leading global tobacco company with a market capitalization of $78.08 billion. Despite recent headwinds, the company has a strong financial profile with a healthy dividend yield of 0.0852%. BTI's forward PE ratio of 7.56 indicates potential undervaluation, while its analyst target price of $36.56 suggests upside potential.
Company Overview
BTI offers a wide range of tobacco and nicotine products to consumers worldwide. The company has a global presence with operations in over 180 countries. BTI's major brands include Dunhill, Kent, Lucky Strike, and Pall Mall.
Fundamental Analysis
Revenue: BTI's revenue has declined slightly in recent quarters due to regulatory pressures and changing consumer preferences. However, the company's gross profit margin remains healthy at 87.3%.
Earnings: BTI's earnings per share (EPS) have been negative in recent quarters due to one-time charges and currency headwinds. However, the company's operating margin remains positive at 34.5%.
Profitability: BTI's return on assets (ROA) and return on equity (ROE) have been negative in recent quarters. However, the company's EBITDA margin of 48.6% indicates strong underlying profitability.
Dividend: BTI has a strong dividend yield of 0.0852%, which is well-covered by its earnings. The company has a history of increasing its dividend annually.
Technical Analysis
Price Action: BTI's stock price has been trending sideways in recent months, trading within a range of $35 to $38. The stock is currently trading above its 50-day moving average but below its 200-day moving average.
Support and Resistance: Key support levels for BTI include $35 and $32.80. Key resistance levels include $38.76 and $36.56.
Indicators: The relative strength index (RSI) for BTI is currently at 50, indicating a neutral market. The moving average convergence divergence (MACD) indicator is also neutral.
Short Term Outlook
In the short term, BTI's stock price is likely to remain range-bound. The stock is facing headwinds from regulatory pressures and changing consumer preferences. However, the company's strong financial profile and attractive dividend yield provide support.
Long Term Outlook
In the long term, BTI's growth prospects are tied to the growth of the global tobacco market. The company is well-positioned to benefit from growth in emerging markets. BTI's investment in new products, such as e-cigarettes, could also drive future growth.
Analyst Recommendations
Analysts are generally positive on BTI's long-term prospects. The consensus analyst rating is "Buy" with a target price of $36.56. Two analysts have a "Strong Buy" rating, two have a "Buy" rating, and one has a "Hold" rating.
