British American Tobacco p.l.c. Fundamental Analysis (NYSE: BTI)
British American Tobacco p.l.c. (NYSE: BTI) shows moderate financial fundamentals with a PE ratio of 14.43, profit margin of 25.00%, and ROE of 13.43%. The company generates $25.8B in annual revenue with weak year-over-year growth of -0.99%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 48.6/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze BTI's fundamental strength across five key dimensions:
Efficiency Score
WeakBTI struggles to generate sufficient returns from assets.
Valuation Score
ExcellentBTI trades at attractive valuation levels.
Growth Score
WeakBTI faces weak or negative growth trends.
Financial Health Score
ModerateBTI shows balanced financial health with some risks.
Profitability Score
ModerateBTI maintains healthy but balanced margins.
Key Financial Metrics
Is BTI Expensive or Cheap?
P/E Ratio
BTI trades at 14.43 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, BTI's PEG of 0.20 indicates potential undervaluation.
Price to Book
The market values British American Tobacco p.l.c. at 1.89 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 4.67 times EBITDA. This is generally considered low.
How Well Does BTI Make Money?
Net Profit Margin
For every $100 in sales, British American Tobacco p.l.c. keeps $25.00 as profit after all expenses.
Operating Margin
Core operations generate 37.26 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $13.43 in profit for every $100 of shareholder equity.
ROA
British American Tobacco p.l.c. generates $5.97 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
British American Tobacco p.l.c. generates strong operating cash flow of $6.61B, reflecting robust business health.
Free Cash Flow
British American Tobacco p.l.c. generates strong free cash flow of $6.03B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $2.79 in free cash annually.
FCF Yield
BTI converts 6.66% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
14.43
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.20
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.89
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.51
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.72
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.84
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.13
vs 25 benchmark
ROA
Return on assets percentage
0.06
vs 25 benchmark
ROCE
Return on capital employed
0.10
vs 25 benchmark
How BTI Stacks Against Its Sector Peers
| Metric | BTI Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 14.43 | 20.66 | Better (Cheaper) |
| ROE | 13.43% | 698.00% | Weak |
| Net Margin | 25.00% | -2238.00% (disorted) | Strong |
| Debt/Equity | 0.72 | 0.77 | Neutral |
| Current Ratio | 0.84 | 2.30 | Weak Liquidity |
| ROA | 5.97% | 320.00% | Weak |
BTI outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews British American Tobacco p.l.c.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
2.38%
Industry Style: Defensive, Dividend, Low Volatility
GrowingEPS CAGR
25.01%
Industry Style: Defensive, Dividend, Low Volatility
High GrowthFCF CAGR
-48.27%
Industry Style: Defensive, Dividend, Low Volatility
Declining