British American Tobacco (BTI) AI Stock Analysis

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British American Tobacco

(NYSE:BTI)

Rating:62Neutral

Price Target:

$54.00

▼(-5.51% Downside)

British American Tobacco's overall score reflects a solid financial foundation, supported by operational cash management and strategic debt reduction. Technical indicators show bullish momentum, though overbought conditions may lead to short-term corrections. Valuation concerns are mitigated by a strong dividend yield. Earnings call insights reveal cautious optimism, with strategic initiatives aimed at overcoming market challenges.

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

Market Cap

$125.52B

Dividend Yield5.22%

Average Volume (3M)5.65M

Price to Earnings (P/E)31.8

Beta (1Y)0.13

Revenue Growth0.48%

EPS GrowthN/A

CountryUS

Employees48,989

SectorConsumer Defensive

Sector Strength59

IndustryTobacco

Share Statistics

EPS (TTM)2.15

Shares Outstanding2,191,440,200

10 Day Avg. Volume5,047,486

30 Day Avg. Volume5,653,717

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 Cap1.17

Enterprise Value/Revenue5.66

Enterprise Value/Gross Profit6.83

Enterprise Value/Ebitda18.91

Forecast

1Y Price Target

$47.00

Price Target Upside-17.76% Downside

Rating ConsensusModerate Sell

Number of Analyst Covering2

British American Tobacco Business Overview & Revenue Model

Company DescriptionBritish American Tobacco (BAT) is a leading global tobacco and nicotine company headquartered in London, UK. With a presence in over 180 markets, BAT operates in the sectors of traditional tobacco products and next-generation products (NGPs) such as e-cigarettes and heated tobacco. Its core product portfolio includes well-known cigarette brands such as Dunhill, Lucky Strike, and Pall Mall, alongside a range of NGPs designed to cater to the evolving preferences of consumers seeking alternatives to traditional smoking.

How the Company Makes MoneyBritish American Tobacco generates revenue primarily through the sale of its tobacco products, including cigarettes and other traditional tobacco items, which remain the largest portion of its income. The company has also been expanding its revenue streams through next-generation products (NGPs), which include e-cigarettes and heated tobacco products, catering to the growing market of consumers looking for reduced-risk alternatives. Key revenue streams include direct sales to retailers, wholesalers, and distributors, as well as partnerships with various stakeholders in the tobacco and NGP sector. Additionally, BAT invests in innovation, marketing, and distribution strategies to enhance its product offerings and increase market share, contributing significantly to its earnings.

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:

Main Street Data

British American Tobacco Earnings Call Summary

Earnings Call Date:Jul 31, 2025

(Q4-2024)

% Change Since: 7.51%|

Next Earnings Date:Feb 05, 2026

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 demonstrates resilience in financial structure and operational cash management despite challenges in revenue growth and profitability. The removal of debt in 2024 strengthens its financial stability, yet earnings volatility remains a concern.

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
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
EBITDA	7.74B	13.28B	12.38B	11.19B	10.71B
Net Income	3.07B	-14.37B	6.67B	6.80B	6.40B
Balance Sheet
Total Assets	118.90B	118.72B	153.55B	137.37B	137.69B
Cash, Cash Equivalents and Short-Term Investments	5.81B	2.96B	4.03B	3.27B	3.38B
Total Debt	36.95B	39.73B	43.14B	39.66B	43.97B
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 Price57.15

Price Trends

50DMA

51.08

Positive

100DMA

46.49

Positive

200DMA

41.45

Positive

Market Momentum

MACD

2.04

Negative

RSI

71.53

Negative

STOCH

63.87

Neutral

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 57.15 is above the 20-day moving average (MA) of 54.83, above the 50-day MA of 51.08, and above the 200-day MA of 41.45, indicating a bullish trend. The MACD of 2.04 indicates Negative momentum. The RSI at 71.53 is Negative, neither overbought nor oversold. The STOCH value of 63.87 is Neutral, 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	73 Outperform	$2.61B	29.52	4.07%	0.37%	75.72%	-6.45%
MO	71 Outperform	$110.12B	12.67	-503.31%	6.20%	-0.18%	-10.69%
TPB	70 Neutral	$1.79B	41.53	26.05%	0.29%	4.44%	-5.94%
PM	69 Neutral	$257.26B	31.36	-37142.11%	3.25%	7.44%	-6.72%
UVV	69 Neutral	$1.32B	12.86	7.20%	6.08%	4.11%	-15.50%
Sector *	62 Neutral	HK$21.80B	9.50	5.51%	4.81%	1.21%	-23.08%
BTI	62 Neutral	$125.52B	31.78	5.97%	5.22%	0.48%	―

* Consumer Defensive Sector Average

Performance Comparison

BTI

British American Tobacco

57.15

23.62

70.44%

Altria Group

65.82

18.15

38.07%

Philip Morris

166.19

52.21

45.81%

UVV

Universal

53.45

3.37

6.73%

TPB

Turning Point Brands

98.58

58.92

148.56%

RLX

RLX Technology

2.13

0.46

27.54%

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: Jul 16, 2025