Core Viewpoint - The tobacco sector, particularly Imperial Brands, has shown significant recovery and is being reevaluated by investors, indicating that Big Tobacco is not dead and is being priced at more realistic valuation multiples [1][23][24] Group 1: Imperial Brands Analysis - Imperial Brands' stock has gained almost 60% since the mini-crash in October 2023, outperforming major competitors like British American Tobacco (BTI), Altria Group (MO), and Philip Morris International (PM) [1][2] - A discounted cash flow (DCF) analysis suggests that even under conservative assumptions, Imperial Brands remains undervalued, with a fair value of £18.2, indicating a potential overvaluation of around 20% at the current price of £21.6 [3][6] - The company's strong free cash flow (FCF) margin of over 30% of net revenue provides a significant margin of safety, making the stock less sensitive to long-term decline expectations [5][24] Group 2: Altria Group Analysis - Altria's cigarette volumes have declined by 11.5% in the first half of 2024, but the company maintains strong pricing power through its Marlboro brand [8][10] - A DCF analysis indicates that Altria's fair value is only $36.7 under a 3% annual decline in FCF, suggesting that the current price of $53 does not align with expected returns [12][14] - Despite challenges, Altria's positioning in smoke-free products shows potential, but significant uncertainties remain regarding its future cash flow growth [11][14] Group 3: British American Tobacco Analysis - British American Tobacco's stock is perceived as undervalued, with a significant portion of its revenues coming from smoke-free products, which accounted for 18% of net revenues in the first half of 2024 [16][18] - The company is making progress in reducing its debt and has announced a share buyback program, which may enhance shareholder value [16] - A DCF analysis suggests that BTI shares are slightly undervalued today, with a fair value that could support a return of 9.1% per annum under conservative assumptions [17][18] Group 4: Philip Morris International Analysis - Philip Morris International has reported strong growth in its smoke-free product segment, which now accounts for 38% of total net revenues, with a year-over-year growth of 13.6% [19][21] - The stock is currently trading at a blended P/E ratio of 19.5, which is high for a tobacco company but justified by its growth prospects [19][21] - Despite the potential for a short-term correction, the strong performance of PMI's smoke-free products and its cigarette business positions it favorably for future growth [22][24]

Core Viewpoint - IMBBY's investment thesis remains strong, supported by a growing cash flow and strategic management decisions that enhance profitability and shareholder returns [1][5][14] Group 1: Financial Performance - IMBBY reported a 12-month cash flow of £3.72 billion, reflecting a sequential increase of 26.5% and aligning with FY2019 levels [1] - The annualized dividend obligation stands at £1.82 billion, consistent sequentially but down 5.2% from FY2019, partly due to lower share counts [1] - The company has announced a 4% increase in its interim dividend and aims for a net-debt-to-EBITDA ratio of 2x by the end of 2024, down from the current 2.5x [1] Group 2: Market Position and Strategy - IMBBY has achieved a 1-year stock price return that outperforms its tobacco peers, attributed to its ability to grow market share in key regions and return value to shareholders through buybacks and dividends [5] - The company reported a 6.3% year-over-year decline in tobacco volumes but a 2.3% increase in net revenues, driven by an 8.6% rise in pricing [5] - IMBBY's Next Generation Products account for only 3.9% of net revenues, indicating room for growth despite current unprofitability [5] Group 3: Competitive Landscape - The oral tobacco market in the US is projected to grow from $6 billion in 2023 to $18 billion by 2027, with a CAGR of 31.6%, presenting an opportunity for IMBBY's new product 'zone' [5] - IMBBY's management emphasizes a focused strategy, maintaining profitability in five key markets that contribute over 70% of its earnings [5] Group 4: Valuation and Future Outlook - IMBBY's forward P/E ratio has recovered to 7.96x from a low of 5.49x, still below its 3-year pre-pandemic average of 11.56x, indicating potential undervaluation [13] - The consensus estimates suggest an adjusted EPS growth CAGR of 7.3% through FY2025, which is considered achievable given the company's performance [5][13] - A bull-case price target of $39.10 implies a potential upside of 46.4%, reflecting strong investor interest despite recent stock price increases [13][14]

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks. Investors should also note that IMBBY holds a PEG ratio of 0.78. This popular figure is similar to the widelyused P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. IMBBY's PEG compares to its industry's average PEG of 2.11. Within the past year, IMBBY's PEG h ...

MmeEmil Tobacco stock Imperial Brands (OTCQX:IMBBY) (OTCQX:IMBBF) has seen notable performance on the stock markets in the past year. At 30%, its total returns are comparable only to Japan Tobacco (OTCPK:JAPAY) (see chart below), while Philip Morris (PM) follows with a much less strong performance. When I wrote about it in February this year, the stock's superior performance was already evident, with an uptick in price even as peer stocks showed weaker trends. A forward dividend yield of 11%, share buybacks ...

Vladyslav Horoshevych/iStock via Getty Images Since I last wrote about the tobacco stock Imperial Brands (OTCQX:IMBBY)(OTCQX:IMBBF) in November, its price is up by 8.7% and total returns are up by 11.7%. Improvement in returns was expected, in line with my Buy rating on the stock and its ADRs at the time based on positive expectations for its financial year 2023 (FY23, year ending September 30, 2023) results. But tobacco companies are going through the process of creative destruction right now, each at ...

Amidst the myriad investment options, the allure of high dividend stocks emerges as a beacon for those seeking returns and a reliable income stream. Picture this, a world where your investments not only yield dividends but also echo a harmony of responsible business practices. In this context, this triumvirate of three distinct entities converge on a common ground of financial prowess, operational finesse and a commitment to sustainability. Together they are redefining the narrative of high dividend stocks, ...

Imperial Brands PLC (OTCQX:IMBBY) Q2 2022 Earnings Conference Call May 17, 2022 4:00 AM ET | --- | |----------------------------------| | | | Company Participants | | Stefan Bomhard - CEO | | Lukas Paravicini - CFO | | Peter Durman - IR | | Conference Call Participants | | Richard Felton - Goldman Sachs | | Faham Baig - Credit Suisse | | John Leinster - Societe Generale | | Rashad Kawan - Morgan Stanley | | Alicia Forry - Investec | | John Fell - Ash Park | | Jared Dinges - JPMorgan | | Stefan Bomhard | Goo ...

* MPERIAS 1 | INTERIM RESULTS 17 MAY 2022 2 | DELIVERING ON OUR STRATEGIC PRIORITIES Stefan Bomhard CEO Disclaimer Certain statements in this announcement constitute or may constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is or may be a forward-looking statement. Such forward-looking statement ...

Imperial Brands PLC (OTCQX:IMBBY) Q4 2021 Earnings Conference Call November 16, 2021 4:00 AM ET Company Participants Stefan Bomhard – Chief Executive Officer Lukas Paravicini – Chief Financial Officer Peter Durman – Head of Investor Relations Conference Call Participants Jonathan Leinster – Société Générale Gaurav Jain – Barclays Patrick Folan – Redburn Alicia Forry – Investec Jared Dinges – JPMorgan Simon Hales – Citigroup Nik Oliver – UBS Stefan Bomhard Good morning to everyone and welcome to our Full-Yea ...

Imperial Brands PLC (OTCQX:IMBBY) Q2 2021 Earnings Conference Call May 18, 2021 2:00 AM ET Company Participants Lukas Paravicini - Director Stefan Bomhard - CEO & Director Oliver Tant - CFO & Executive Director Conference Call Participants Gaurav Jain - Barclays Bank Adam Spielman - Citigroup Alicia Forry - Investec Bank Patrick Folan - Redburn Sanath Sudarsan - Morgan Stanley Jonathan Leinster - Societe Generale Faham Baig - Crédit Suisse Jared Dinges - JPMorgan Chase & Co. Stefan Bomhard Good morning, eve ...