British American Tobacco (BTI) AI Stock Analysis

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British American Tobacco

(NYSE:BTI)

Rating:64Neutral

Price Target:

$49.00

▲(0.41%Upside)

The overall stock score for British American Tobacco is driven primarily by its stable financial structure and positive technical momentum. While the company faces profitability challenges and market-specific headwinds, its strong cash flow and strategic growth in new categories provide a balanced outlook. Investors should consider the stock's high valuation and potential overbought technical signals.

British American Tobacco (BTI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$105.49B

Dividend Yield6.17%

Average Volume (3M)7.13M

Price to Earnings (P/E)27.9

Beta (1Y)0.19

Revenue Growth-2.51%

EPS GrowthN/A

CountryUS

Employees48,989

SectorConsumer Defensive

Sector Strength70

IndustryTobacco

Share Statistics

EPS (TTM)-0.85

Shares Outstanding2,196,691,700

10 Day Avg. Volume7,694,796

30 Day Avg. Volume7,134,068

Financial Highlights & Ratios

PEG Ratio-8.30

Price to Book (P/B)0.99

Price to Sales (P/S)0.00

P/FCF Ratio7.55

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$35.50

Price Target Upside-27.25% Downside

Rating ConsensusModerate Sell

Number of Analyst Covering1

British American Tobacco Business Overview & Revenue Model

Company DescriptionBritish American Tobacco (BTI) is a leading global tobacco and nicotine products company, operating in more than 180 countries. The company is headquartered in London, United Kingdom, and it offers a comprehensive portfolio of products including traditional combustible cigarettes, reduced-risk products like vapor and heated tobacco products, oral tobacco, and nicotine pouches. Some of its well-known cigarette brands include Dunhill, Kent, Lucky Strike, Pall Mall, and Rothmans. BTI is committed to transforming its business with a focus on providing consumers with a greater choice of enjoyable and less risky products.

How the Company Makes MoneyBritish American Tobacco (BTI) primarily generates revenue through the sale of tobacco and nicotine products. The company's key revenue streams include the sale of combustible products, such as traditional cigarettes, which remain a significant part of its business. Additionally, BTI is increasingly focusing on its 'New Categories' portfolio, which includes vapor products, tobacco heating products, and modern oral products, as part of its strategy to reduce the health impact of its business. This shift is supported by substantial investment in research and development to innovate and expand offerings in these categories. BTI also leverages its extensive distribution network, brand strength, and strategic acquisitions to enhance its market presence and drive revenue growth. The company benefits from economies of scale and a diversified geographic footprint that helps mitigate risks associated with regulatory changes in specific markets.

British American Tobacco Earnings Call Summary

Earnings Call Date:Feb 13, 2025

(Q4-2024)

% Change Since: 16.27%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call presented a balanced view of achievements and challenges. Notable improvements in new category growth, financial flexibility, and a path to recovery in the U.S. were highlighted. However, significant challenges in the vapor market and headwinds in Bangladesh and Australia present concerns. The overall sentiment leans towards cautious optimism, with confidence in strategic investments and future growth prospects.

Q4-2024 Updates

Positive Updates

Transformation Momentum and Financial Flexibility

The company sharpened execution and delivered improved performance in the second half of the year, with smokeless accounting for 17.5% of group revenue, up 1 percentage point versus last year. New category contribution improved by GBP251 million and a 7 percentage point increase in category contribution margin on an organic constant rates basis.

New Category Revenue Growth

Group revenue grew by 1.3%, and new category revenue grew by 8.9%. Adjusted operating profit rose 1.4%, and diluted EPS increased by 3.6%. Modern Oral revenue grew 53% in 2024, with strong growth across all regions.

Commitment to Shareholder Returns

Progress in financial flexibility enabled the initiation of sustainable share buyback, with leverage within the target range at 2.4 times, alongside a progressive dividend with 2% growth announced.

Strong Performance in Europe

New category growth enabled the European business to exceed group mid-term revenue guidance, with significant increases in absolute category contribution through scale and efficiencies.

U.S. Market Recovery

Investments in the U.S. market have begun to pay off, with volume share stabilizing and plans for a return to growth in 2025, despite macroeconomic pressures and illicit trade challenges.

Negative Updates

Challenges in the Vapor Market

Vapor revenue fell by 2.5% due to weak enforcement against illicit single-use vapes in the U.S. and Canada, distorting competition. The U.S. volumes declined by 4%, and without stronger enforcement, illicit vapor products will continue to impact the legal market.

Impact of Market Exits and Supply Chain Issues

Organic volumes declined 5% in combustibles, mainly due to U.S. market exits and supply chain issues in Sudan. Excluding these, volume declined 3.5%.

Headwinds in Bangladesh and Australia

Significant headwinds in Bangladesh due to sharp excise increases and illicit trade, and in Australia due to new tobacco regulations and rising illicit trade, expected to impact 2025 group revenue growth by 1% and group APFO growth by close to 2%.

Pressure from Macro and Illicit Trade in the U.S.

The U.S. revenue declined by 3.4% due to ongoing macroeconomic pressures impacting affordability and illicit vapor products affecting both combustibles and vapor.

Company Guidance

In the recent call, the company provided guidance for 2025 and 2026, indicating an expected group revenue growth of around 1% for 2025, impacted by significant headwinds in Bangladesh and Australia, which will affect group revenue by 1% and group adjusted profit from operations (APFO) by close to 2%. Despite these challenges, the company remains committed to achieving a 3% to 5% revenue growth and a 4% to 6% APFO growth, adjusted for Canada at constant rates, by 2026. This optimism is underpinned by expectations of an improving U.S. financial performance, further growth in new categories, and significant cost efficiencies, targeting an additional GBP2 billion in savings by 2030. Additionally, the company plans to continue rewarding shareholders with a progressive dividend and sustainable share buybacks while maintaining a balanced capital allocation.

British American Tobacco Financial Statement Overview

Summary

British American Tobacco displays a robust financial structure with zero debt and strong cash flow management. However, the company encounters significant challenges with earnings volatility and a negative net profit margin, impacting its overall financial health.

Income Statement

Neutral

British American Tobacco's income statement reveals mixed performance. The gross profit margin remains robust at 82.8%, indicating strong cost management. However, the company has faced challenges with volatile net income, evident from the negative net profit margin of -52.7% in 2023, primarily due to a significant EBIT loss. Recent revenue growth has been stagnating, with a 5.19% decline from 2022 to 2023, raising concerns about future growth prospects.

Balance Sheet

Neutral

The balance sheet reflects a stable financial position with zero debt in 2024, which is a positive turnaround from previous years. The equity ratio is healthy at 41.8%, showcasing a solid capital structure. However, the return on equity has been inconsistent, with a significant drop in 2023 due to negative net income. The company's asset base remains strong, supporting long-term stability.

Cash Flow

Neutral

Cash flow analysis indicates steady operational cash generation, with a 5.5% increase in free cash flow from 2023 to 2024. The operating cash flow to net income ratio was significantly impacted in 2023 due to negative net income, but the free cash flow has remained positive, reflecting effective cash management despite earnings volatility.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
25.87B	27.28B	27.66B	25.68B	25.78B
	Gross Profit
21.43B	22.39B	22.85B	21.09B	21.33B
	EBIT
2.74B	-15.75B	10.52B	10.91B	10.94B
	EBITDA
7.74B	13.28B	12.38B	11.19B	10.71B
	Net Income Common Stockholders
3.07B	-14.37B	6.67B	6.80B	6.40B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.81B	2.96B	4.03B	3.27B	3.38B
	Total Assets
118.90B	118.72B	153.55B	137.37B	137.69B
	Total Debt
36.95B	39.73B	43.14B	39.66B	43.97B
	Net Debt
31.65B	37.37B	39.69B	36.85B	40.83B
	Total Liabilities
68.90B	65.78B	77.84B	69.96B	74.73B
	Stockholders Equity
49.64B	52.57B	75.37B	67.10B	62.67B
Cash Flow		Free Cash Flow
9.52B	10.25B	9.87B	9.19B	9.28B
	Operating Cash Flow
10.13B	10.71B	10.39B	9.72B	9.79B
	Investing Cash Flow
1.38B	-296.00M	-705.00M	-1.14B	-783.00M
	Financing Cash Flow
-10.63B	-9.31B	-8.88B	-8.75B	-7.90B

British American Tobacco Technical Analysis

Technical Analysis Sentiment

Positive

Last Price48.80

Price Trends

50DMA

43.61

Positive

100DMA

41.52

Positive

200DMA

38.37

Positive

Market Momentum

MACD

1.53

Negative

RSI

75.47

Negative

STOCH

92.60

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BTI, the sentiment is Positive. The current price of 48.8 is above the 20-day moving average (MA) of 46.01, above the 50-day MA of 43.61, and above the 200-day MA of 38.37, indicating a bullish trend. The MACD of 1.53 indicates Negative momentum. The RSI at 75.47 is Negative, neither overbought nor oversold. The STOCH value of 92.60 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BTI.

British American Tobacco Risk Analysis

British American Tobacco disclosed 10 risk factors in its most recent earnings report. British American Tobacco reported the most risks in the "Legal & Regulatory" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

British American Tobacco Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PM	78 Outperform	$286.55B	37.88	-37142.11%	2.93%	6.83%	-4.85%
MO	73 Outperform	$100.93B	10.01	-503.31%	6.81%	-1.03%	25.20%
RLX	73 Outperform	$2.67B	29.66	4.07%	0.37%	75.72%	-6.45%
UVV	68 Neutral	$1.51B	15.95	6.56%	5.31%	7.23%	-20.91%
TPB	68 Neutral	$1.35B	33.07	27.53%	0.40%	3.17%	-2.23%
Sector *	65 Neutral	$8.89B	14.91	4.67%	6.16%	3.60%	-2.89%
BTI	64 Neutral	$105.49B	27.94	5.87%	6.17%	-2.51%	―

* Consumer Defensive Sector Average

Performance Comparison

BTI

British American Tobacco

48.80

20.28

71.11%

Altria Group

59.81

17.57

41.60%

Philip Morris

184.33

86.67

88.75%

UVV

Universal

60.33

16.35

37.18%

TPB

Turning Point Brands

75.50

43.69

137.35%

RLX

RLX Technology

2.15

0.33

18.13%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.