BTI
British American Tobacco p.l.c.
$55.35
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 31.0% below fair value
You pay
$55.35
Bear
$66.09
Fair
$80.25
Bull
$94.41
Bear
$66.09
+19.4%
$4.72 × 14x P/E
Fair
$80.25
+45.0%
$4.72 × 17x P/E
Bull
$94.41
+70.6%
$4.72 × 20x P/E
Adjust Assumptions
17.0x
4.72$
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
11.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (18 analysts)
$40.00
Divergence from AlphaVal
101%
Summary
Applying a 17x P/E to adjusted EPS of $4.72, the base-case value is $80.25 per share. DDM cross-check: $108.18.
Warnings
Dividend-based valuation: $108.18 (above our primary estimate by 35%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $40.00 (from 18 analysts). Our estimate is 101% above the consensus -- consider that gap carefully.
Financial statements were converted from GBP into USD using GBPUSD at 1.3526 USD per GBP.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples