Imperial Brands: Buybacks Accelerate Growth

Summary

• Even though Imperial Brands' shares have risen by 90% in the last 4 years, shares are still trading at low valuations.
• Share buybacks should accelerate growth to 6-7% a year, making it a compelling long-term investment, at least for the medium term.
• The market has underestimated cash flows generated by Big Tobacco for decades, resulting in high dividends and low valuations for share buybacks.
• Risk/reward seems favorable, although volume declines and free cash flow generation need to be monitored.

peepo

Imperial Brands (OTCQX:IMBBY, OTCQX:IMBBF) is the 4th largest tobacco company in an oligopolistic industry. While it doesn't get the attention of its larger peers, investment returns have been amongst the highest since its lows in 2020.

In this

Analyst’s Disclosure: I/we have a beneficial long position in the shares of IMPERIAL BRANDS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.