British American Tobacco Ups Guidance: Stock Still Appears To Be A Bargain

(9min)

Summary

  • BTI is navigating headwinds in combustibles and vaping, but gains in oral products and New Categories support modest revenue growth forecasts for 2025.
  • The company’s strong free cash flow, safe dividend, and ongoing ITC stake monetization bolster the balance sheet and support shareholder returns.
  • Valuation remains attractive at 7.2x EBITDA, offering significant upside potential if growth improves, especially compared to peers like Altria and Philip Morris.
  • I continue to hold BTI as a core position, recommending adding on pullbacks, with a bull case scenario offering up to 40% upside in coming years.
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Electronic cigarette with steam in smoke on a dark background

Anton Marchenkov/iStock via Getty Images

For some background, we discussed British American Tobacco here as a buy after the stock fell on their impairment charge in December 2023.

British American Tobacco (NYSE:BTI) gave us an early read on

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This article was written by

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Thomas Lott started as a portfolio manager at a hedge fund in 2003 and has worked as a financial professional for over 30 years. Thomas espouses Graham and Dodd/Buffett style investing, always on the lookout for high-quality equities at attractive valuations. He is a graduate of Vanderbilt University with an MBA from Northwestern's Kellogg School of Management.

Thomas leads the investing group Cash Flow Compounders where, along with NJ Value Investor, he aim to find the best companies in the world that are trading at attractive valuations. Features of Learn more include: their exclusive portfolio of compounders, 2-4 in-depth new ideas a month, live chat, and direct access for questions. Learn more.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of BTI, PM 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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