BTAFF - British American Tobacco: Still Not Worth Investing

2024-06-05 05:38:13 ET

Summary

• British American Tobacco is a favorite among investors due to its staple nature, seemingly low stock price, high dividend yield, and potential to grow into the smokeless future.
• BTI's focus on non-combustible products is growing, but it may not be enough to offset the decline in the core business, making the stock less attractive.
• The stock multiples suggest that the market expects that the company will continue operating as it has, without improvements. My expectations are slightly worse.
• That's why I reiterate my "Hold" rating on BTI.

Introduction

British American Tobacco ( BTI ) ( BTAFF ) continues to be an investor's favorite, mainly due to the staple nature of the business, the inexpensiveness of the stock, and the high dividend yield it offers. There is a strong bullish consensus on the stock.

I have a more contrarian view. Although BTI is a globally established provider of tobacco products, the business faces headwinds, especially impacting its core business, which currently generates more than 80% of revenue....

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