British American Tobacco p.l.c. (NYSE: BTI)

Sector: Consumer Defensive Industry: Tobacco CIK: 0001303523
Market Cap 130.31 Bn
P/B 2.09
P/E 12.42
P/S 3.77
ROIC (Qtr) 0.00
Div Yield % 5.09
Rev 1y % (Qtr) 0.00
Total Debt (Qtr) 47.39 Bn
Debt/Equity (Qtr) 0.76
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About

British American Tobacco p.l.c. (BAT), often recognized by its stock symbol BTI, operates in the tobacco industry, a highly competitive and regulated sector. As one of the largest tobacco companies globally, BAT boasts a presence in over 180 countries. This essay will delve into BAT's primary business activities, revenue generation, industry position, and notable brand names. BAT's main business activities revolve around the production and distribution of tobacco products, including cigarettes, cigars, and other tobacco-related items. The company's...

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Investment thesis

Bull case

  • Operating cash flow of 12.03B provides exceptional 8899x coverage of minority interest expenses 1.35M, showing strong core operations.
  • Robust free cash flow of 11.12B exceeds capital expenditure of 901.35M by 12.34x, indicating strong organic growth funding capability.
  • Operating cash flow of 12.03B provides solid 0.61x coverage of current liabilities 19.63B, showing strong operational health.
  • Tangible assets of 30.21B provide robust 16.56x coverage of other current liabilities 1.82B, indicating strong asset backing.
  • Cash position of 5.17B provides exceptional 3827x coverage of minority interest expenses 1.35M, indicating strong liquidity.

Bear case

  • Operating cash flow of 12.03B provides thin coverage of dividend payments of (7.08B) with a -1.70 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High financing cash flow of (11.84B) relative to working capital of (2.49B), which is 4.76x suggests concerning dependence on external funding for operational needs.
  • Free cash flow of 11.12B represents just -4.44x of debt issuance (2.50B), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Other non-current liabilities of 20.15B represent a high 0.67x of tangible assets 30.21B, suggesting significant long-term obligations without clear asset backing.
  • Operating cash flow of 12.03B barely covers operating expenses of 15.39B with a 0.78 ratio, suggesting thin operational efficiency margins and limited flexibility.

Operating Segment Breakdown. Breakdown of Revenue (2025)

Operating Segment Breakdown. Breakdown of Revenue (2025)

Peer comparison

Companies in the Tobacco
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PM Philip Morris International Inc. 286.67 Bn 25.26 7.05 48.84 Bn
2 MO Altria Group, Inc. 132.50 Bn 30.66 5.43 25.70 Bn
3 BTI British American Tobacco p.l.c. 130.31 Bn 12.42 3.77 47.39 Bn
4 RLX RLX Technology Inc. 2.87 Bn 26.73 5.63 0.02 Bn
5 TPB Turning Point Brands, Inc. 2.19 Bn 81.36 10.62 0.30 Bn
6 UVV Universal Corp /Va/ 1.32 Bn 20.69 0.66 1.11 Bn
7 ISPR Ispire Technology Inc. 0.17 Bn -4.78 1.75 0.01 Bn
8 XXII 22nd Century Group, Inc. 0.00 Bn -0.15 0.08 0.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.56 1.74
EV to Cash from Ops. EV/CFO 19.14 36.76
EV to Debt EV to Debt 4.86 0.92
EV to EBIT EV/EBIT 14.59 12.10
EV to EBITDA EV/EBITDA 13.58 31.94
EV to Free Cash Flow [EV/FCF] EV/FCF 20.69 53.50
EV to Market Cap EV to Market Cap 1.77 -53.22
EV to Revenue EV/Rev 6.65 3.60
Price to Book Value [P/B] P/B 2.09 5.34
Price to Earnings [P/E] P/E 12.42 21.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 2.00 1.31
Dividend Payout Ratio % Dividend Payout Ratio % 63.20 37.42
Dividend per Basic Share Div per Share (Qtr) 3.00 1.81
FCF Dividend Payout Ratio % FCF Dividend Payout Ratio % 79.85 42.94
Interest Coverage Interest Coverage 6.42 -12.36
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % -55.74 14.47
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -21.89 49.35
Dividend Growth (1y) % Div 1y % (Qtr) 0.91 2.17
EBIAT Growth (1y) % EBIAT Growth (1y) % 145.39 30.18
EBITDA Growth (1y) % EBITDA Growth (1y) % 132.33 2.41
EBIT Growth (1y) % EBIT Growth (1y) % 179.10 30.58
EBT Growth (1y) % EBT Growth (1y) % 211.16 17.61
EPS Growth (1y) % EPS Growth (1y) % 177.59 19.96
FCF Growth (1y) % FCF Growth (1y) % -19.90 -140.66
Gross Profit Growth (1y) % Gross Profit Growth (1y) % 7.87 -1.72
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Utilization Ratio 0.32 0.56
Cash Payout Ratio Cash Payout Ratio 0.55 0.28
Cash Ratio Cash Ratio (Qtr) 0.26 0.92
Current Ratio Curr Ratio (Qtr) 0.87 2.85
Debt to Equity Ratio Debt/Equity (Qtr) 0.76 -1.43
Interest Cover Ratio Interest Cover Ratio 6.42 -12.36
Times Interest Earned Times Interest Earned 6.42 -12.36
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % 55.50 -38.32
EBIT Margin % EBIT Margin % 33.74 -36.97
EBT Margin % EBT Margin % 38.49 -48.97
Gross Margin % Gross Margin % 83.50 26.54
Net Profit Margin % Net Profit Margin % 30.30 -54.22