SWMAY - Imperial Brands: Headwinds Gathering Avoid Its 8.8% Dividend Yield
- While Imperial Brands has not reported results since November, recent news across the Tobacco sector have made us even more cautious.
- Other Tobacco companies have reported softness in Q4 volumes, from the COVID benefit fading and disposable incomes under pressure.
- Philip Morris' IQOS is making inroads in Europe. Record oil prices after Russia invaded Ukraine will be an even bigger headwind in 2022.
- Imperial Brands has little Russian exposure, but its volumes may see faster declines as rivals redirect Heat Not Burn products to Europe.
- At 1,589p, the stock is trading at a 6.4x P/E and an 8.8% Dividend Yield, but this is not cheap enough in our view. Avoid.
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Imperial Brands: Headwinds Gathering, Avoid Its 8.8% Dividend Yield