British American Tobacco (BTI) AI Stock Analysis

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British American Tobacco

(NYSE:BTI)

Select Model

Neutral 59 (OpenAI - 4o)

Rating:59Neutral

Price Target:

$58.00

▲(0.12% Upside)

British American Tobacco's overall stock score reflects a mix of strengths and challenges. The company's financial stability is bolstered by debt removal and strong cash management, but earnings volatility and revenue decline pose risks. Technical indicators suggest positive momentum, while valuation metrics highlight potential overvaluation concerns. The earnings call provided a neutral sentiment with both growth opportunities and regional challenges.

Positive Factors

Debt Removal

The removal of debt strengthens BAT's financial stability, providing more flexibility for strategic investments and reducing financial risk.

Smokeless Product Growth

Growth in smokeless products indicates successful adaptation to consumer trends and potential for future revenue expansion in reduced-risk categories.

Strong Cash Generation

Strong cash generation supports ongoing investments and shareholder returns, underpinning long-term financial health and strategic initiatives.

Negative Factors

Revenue Decline

Stagnating revenue growth raises concerns about BAT's ability to maintain market share and adapt to changing consumer preferences.

Vapour Revenue Decline

Declining vapour revenue highlights challenges in combating illicit trade, which can impact market share and revenue in the growing e-cigarette segment.

Regulatory Challenges

Regulatory challenges in the U.S. could hinder BAT's ability to expand its product offerings and capture market share in the growing vape segment.

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

Market Cap

$126.65B

Dividend Yield5.14%

Average Volume (3M)3.75M

Price to Earnings (P/E)32.2

Beta (1Y)>-0.01

Revenue Growth0.48%

EPS GrowthN/A

CountryUS

Employees48,989

SectorConsumer Defensive

Sector Strength42

IndustryTobacco

Share Statistics

EPS (TTM)2.15

Shares Outstanding2,181,735,000

10 Day Avg. Volume3,497,843

30 Day Avg. Volume3,752,723

Financial Highlights & Ratios

PEG Ratio-0.17

Price to Book (P/B)1.29

Price to Sales (P/S)2.48

P/FCF Ratio6.75

Enterprise Value/Market Cap1.16

Enterprise Value/Revenue5.72

Enterprise Value/Gross Profit6.86

Enterprise Value/Ebitda18.18

Forecast

1Y Price Target

$62.00

Price Target Upside7.03% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

EPS Forecast (FY)4.5

Revenue Forecast (FY)$34.12B

British American Tobacco Business Overview & Revenue Model

Company DescriptionBritish American Tobacco p.l.c. provides tobacco and nicotine products to consumers in the Americas, Europe, the Asia-Pacific, the Middle East, Africa, and the United States. It offers vapour, heated, and modern oral nicotine products; combustible cigarettes; and traditional oral products, such as snus and moist snuff. The company provides its products under the Vuse, glo, Velo, Grizzly, Kodiak, Dunhill, Kent, Lucky Strike, Pall Mall, Rothmans, Newport, Natural American Spirit, and Camel brands. The company distributes its products to retail outlets. British American Tobacco p.l.c. was founded in 1902 and is based in London, the United Kingdom.

How the Company Makes MoneyBritish American Tobacco generates revenue primarily through the sale of its tobacco products, which include cigarettes and other tobacco items. The company's key revenue streams consist of traditional combustible cigarettes, which remain the largest segment, and a growing range of reduced-risk products such as vaporizers and heated tobacco products, which are gaining popularity among consumers seeking alternatives to smoking. Additionally, BAT generates income from its investments in various subsidiaries and strategic partnerships focused on product development and distribution. The company also focuses on operational efficiency and cost management to enhance profitability. Significant factors contributing to its earnings include brand loyalty, market share in various regions, and the ongoing shift in consumer preferences towards less harmful alternatives, which BAT is actively working to capitalize on through innovation and marketing strategies.

British American Tobacco Key Performance Indicators (KPIs)

Any

Adjusted Profit from Operations by Geography

Adjusted Profit from Operations by Geography
Shows profit performance across different regions, highlighting areas of strong operational efficiency and potential challenges due to local market conditions or regulatory environments.

Chart InsightsBritish American Tobacco's adjusted profit from operations shows a notable shift with the US consistently leading, albeit with some fluctuations. AME and APMEA regions have recently emerged as significant contributors, while APME and AMSSA have seen their contributions cease. This geographic reallocation suggests a strategic pivot towards markets with higher growth potential, potentially driven by regulatory changes or shifting consumer preferences. The absence of recent earnings commentary leaves the underlying reasons open to interpretation, but the data indicates a clear realignment of focus within the company's operational strategy.

Data provided by:

The Fly

British American Tobacco Earnings Call Summary

Earnings Call Date:Jul 31, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Feb 12, 2026

Earnings Call Sentiment Neutral

The earnings call presented a balanced view with notable achievements in smokeless product growth, particularly in the U.S. and Modern Oral segments. However, challenges such as the decline in Vapour revenue and issues in the APMEA region due to regulatory hurdles were also highlighted. The overall sentiment is neutral due to the balance of positive and negative factors.

Q2-2025 Updates

Positive Updates

Smokeless Revenue Growth

Smokeless products now account for 18.2% of group revenue, up 70 basis points compared to last year. The company added 1.4 million smokeless consumers, reaching 30.5 million, mainly driven by success in Modern Oral.

Revenue and Profit Growth in the U.S.

The company reported a return to both revenue and profit growth in the U.S. for the first time since 2022, with revenue increasing by 3.8% and profit rising by 3.2%.

Modern Oral Segment Performance

Modern Oral grew over 40%, and is the largest new category in the AME region with a 63% volume share in top markets. The gross margin is 10 percentage points above combustibles.

Strong Cash Generation

The company continues to enhance financial flexibility and is on track to deliver more than GBP 50 million in free cash flow by 2030. The 2025 share buyback increased by GBP 200 million to GBP 1.1 billion.

Negative Updates

Vapour Revenue Decline

Vapour revenue declined by 13%, primarily due to illicit trade in the U.S. and Canada.

Challenges in APMEA Region

Total revenue in APMEA declined by 4.8%, with combustibles down 7.9% due to fiscal and regulatory headwinds in Bangladesh and Australia.

Impact of Illicit Vape Products

Illicit vape products in Canada and the U.S. continue to impact legal market performance, affecting sales and market share.

Company Guidance

In the 2025 interim results call, BAT provided detailed guidance showcasing a strong performance slightly ahead of expectations. Key metrics highlighted include a 1.8% increase in group revenue at the upper end of the 1% to 2% growth range, a 3% rise in adjusted gross profit, and a 1.9% increase in adjusted profit from operations, with adjusted diluted EPS up by 1.7%. The company anticipates full-year revenue at the top end of its guidance, maintaining an adjusted profit from operations (APFO) growth target of 1.5% to 2.5%. The call emphasized the significant growth in the smokeless segment, with smokeless products accounting for 18.2% of group revenue, up 70 basis points from the previous year. Modern Oral's outstanding growth contributed to a 40% increase in revenue, with the U.S. returning to both revenue and profit growth. The company also highlighted its strategic investments in innovation and regulatory affairs, planning a GBP 1.1 billion share buyback and projecting free cash flow exceeding GBP 50 million by 2030. The new Fit2Win program is expected to generate GBP 500 million in annualized savings by 2028, supporting long-term profit and cash flow growth.

British American Tobacco Financial Statement Overview

Summary

British American Tobacco demonstrates resilience in its financial structure with zero debt in 2024 and strong cash management. However, challenges in revenue growth and profitability, including a negative net profit margin and volatile net income, impact the overall financial performance.

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	25.60B	25.87B	27.28B	27.66B	25.68B	25.78B
Gross Profit	21.34B	21.43B	22.39B	22.85B	21.09B	21.33B
EBITDA	8.05B	7.74B	13.28B	12.23B	11.19B	11.78B
Net Income	3.09B	3.07B	-14.37B	6.67B	6.80B	6.40B
Balance Sheet
Total Assets	110.23B	118.90B	118.72B	153.55B	137.37B	137.69B
Cash, Cash Equivalents and Short-Term Investments	4.89B	5.81B	2.96B	4.03B	3.27B	3.38B
Total Debt	35.33B	36.95B	39.73B	43.14B	39.66B	43.97B
Total Liabilities	63.05B	68.90B	65.78B	77.84B	69.96B	74.73B
Stockholders Equity	46.87B	49.64B	52.57B	75.37B	67.10B	62.67B
Cash Flow
Free Cash Flow	8.67B	9.52B	10.25B	9.87B	9.19B	9.28B
Operating Cash Flow	9.27B	10.13B	10.71B	10.39B	9.72B	9.79B
Investing Cash Flow	954.00M	1.38B	-296.00M	-705.00M	-1.14B	-783.00M
Financing Cash Flow	-11.39B	-10.63B	-9.31B	-8.88B	-8.75B	-7.90B

British American Tobacco Technical Analysis

Technical Analysis Sentiment

Positive

Last Price57.93

Price Trends

50DMA

53.14

Positive

100DMA

53.85

Positive

200DMA

47.90

Positive

Market Momentum

MACD

1.31

Negative

RSI

68.93

Neutral

STOCH

89.23

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 57.93 is above the 20-day moving average (MA) of 55.48, above the 50-day MA of 53.14, and above the 200-day MA of 47.90, indicating a bullish trend. The MACD of 1.31 indicates Negative momentum. The RSI at 68.93 is Neutral, neither overbought nor oversold. The STOCH value of 89.23 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 41 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 (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RLX	76 Outperform	$3.02B	28.60	4.71%	0.31%	51.49%	21.43%
UVV	68 Neutral	$1.32B	11.89	7.72%	6.26%	3.01%	-7.14%
TPB	67 Neutral	$1.89B	34.88	22.54%	0.29%	6.71%	8.16%
MO	64 Neutral	$99.28B	11.28	―	7.00%	-0.96%	-11.42%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
PM	62 Neutral	$243.07B	28.28	―	3.57%	7.72%	-12.45%
BTI	59 Neutral	$126.65B	32.17	5.97%	5.14%	0.48%	―

* Consumer Defensive Sector Average

Performance Comparison

BTI

British American Tobacco

57.93

23.25

67.04%

Altria Group

58.82

6.20

11.78%

Philip Morris

154.62

28.84

22.93%

UVV

Universal

53.00

0.03

0.06%

TPB

Turning Point Brands

97.90

34.90

55.40%

RLX

RLX Technology

2.40

0.58

31.87%

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.Date of analysis: Nov 24, 2025