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British American Tobacco (BTI)
NYSE:BTI
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British American Tobacco (BTI) AI Stock Analysis

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BTI

British American Tobacco

(NYSE:BTI)

Rating:62Neutral
Price Target:
$54.00
▲(3.35%Upside)
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)

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 (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 Key Performance Indicators (KPIs)

Any
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 maintaining a strong lead despite some fluctuations, while APMEA and AME regions have recently emerged as significant contributors. The absence of data for several regions in recent years suggests a strategic focus shift or possible divestments. This regional realignment could indicate a strategic pivot towards markets with higher growth potential or profitability, reflecting a dynamic adaptation to global market conditions.
Data provided by:Main Street Data

British American Tobacco Earnings Call Summary

Earnings Call Date:Feb 13, 2025
(Q4-2024)
|
% Change Since: 26.61%|
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 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
45
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
60
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
55
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue25.87B27.28B27.66B25.68B25.78B
Gross Profit21.43B22.39B22.85B21.09B21.33B
EBITDA7.74B13.28B12.38B11.19B10.71B
Net Income3.07B-14.37B6.67B6.80B6.40B
Balance Sheet
Total Assets118.90B118.72B153.55B137.37B137.69B
Cash, Cash Equivalents and Short-Term Investments5.81B2.96B4.03B3.27B3.38B
Total Debt36.95B39.73B43.14B39.66B43.97B
Total Liabilities68.90B65.78B77.84B69.96B74.73B
Stockholders Equity49.64B52.57B75.37B67.10B62.67B
Cash Flow
Free Cash Flow9.52B10.25B9.87B9.19B9.28B
Operating Cash Flow10.13B10.71B10.39B9.72B9.79B
Investing Cash Flow1.38B-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 Price52.25
Price Trends
50DMA
47.47
Positive
100DMA
44.05
Positive
200DMA
39.76
Positive
Market Momentum
MACD
1.49
Negative
RSI
69.13
Neutral
STOCH
82.23
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 52.25 is above the 20-day moving average (MA) of 50.18, above the 50-day MA of 47.47, and above the 200-day MA of 39.76, indicating a bullish trend. The MACD of 1.49 indicates Negative momentum. The RSI at 69.13 is Neutral, neither overbought nor oversold. The STOCH value of 82.23 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 (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$1.40B34.9127.53%0.37%3.17%-2.23%
73
Outperform
$2.73B31.314.07%0.20%75.72%-6.45%
69
Neutral
$250.72B31.25-37142.11%3.36%7.44%-6.72%
68
Neutral
¥197.01B21.388.29%2.28%4.93%0.72%
68
Neutral
$100.41B10.00-503.31%6.82%-1.03%25.20%
63
Neutral
$1.36B14.756.56%5.93%7.23%-20.91%
62
Neutral
$115.49B29.995.87%0.12%-2.51%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
BTI
British American Tobacco
52.25
19.29
58.53%
MO
Altria Group
59.84
12.90
27.48%
PM
Philip Morris
160.92
50.84
46.18%
UVV
Universal
54.87
4.73
9.43%
TPB
Turning Point Brands
78.29
40.80
108.83%
RLX
RLX Technology
2.23
0.44
24.58%
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