BTI
British American Tobacco p.l.c.
$60.87
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 38.8% below fair value
You pay
$60.87
Bear
$81.93
Fair
$99.49
Bull
$117.04
Bear
$81.93
+34.6%
$7.02 × 14x P/E
Fair
$99.49
+63.4%
$7.02 × 17x P/E
Bull
$117.04
+92.3%
$7.02 × 20x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
8.7x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $40.00 from 18 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $99.49 per share.
Warnings
The company's reported profits differ from official accounting profits by 50%. Check what costs are being left out of the adjusted number.
Wall Street's average price target is $40.00 (from 18 analysts). Our estimate is 198% above the consensus -- consider that gap carefully.
Financial statements were converted from GBP into USD using GBPUSD at 1.3411 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