June 22, 2023
Top 10 Stock British American Tobacco Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: British American Tobacco – Top 10 Stock in FTSE 100 Index
British American Tobacco is listed as a top 10 stock on June 22, 2023 in the market index FTSE 100 because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is below average and thus a signal for caution. Based on the Obermatt 360° View of 73 (high 73% performer), Obermatt assesses an overall buy recommendation for British American Tobacco on June 22, 2023.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Tobacco |
| Index | FTSE All Shares, FTSE 100, FTSE 350, Dividends Europe, Employee Focus EU, Diversity Europe, Human Rights, Recycling |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View British American Tobacco Buy
| 360 METRICS | June 22, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 90 |
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| GROWTH | ||||||||
| GROWTH | 67 |
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| SAFETY | ||||||||
| SAFETY | 32 |
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| SENTIMENT | ||||||||
| SENTIMENT | 44 |
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| 360° VIEW | ||||||||
| 360° VIEW | 73 |
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ANALYSIS: With an Obermatt 360° View of 73 (better than 73% compared with alternatives), overall professional sentiment and financial characteristics for the stock British American Tobacco are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for British American Tobacco. The consolidated Value Rank has an attractive rank of 90, which means that the share price of British American Tobacco is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 90% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 67, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 44. Professional investors are more confident in 56% other stocks. Worryingly, the company has risky financing, with a Safety rank of 32. This means 68% of comparable companies have a safer financing structure than British American Tobacco. ...read more
RECOMMENDATION: With a 360° View of 73, British American Tobacco is better positioned than 73% of all alternative stock investment opportunities based on the Obermatt Method. Even though half of the consolidated Obermatt Ranks are above-average, namely the Value Rank at 90 and the Growth Rank above-average at 67, the picture is still mixed. The professional investor community is skeptical, with the Sentiment Rank below-average at 44. In addition, the company financing structure is on the riskier side (Safety Rank of 32). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. One may be tempted by above-average growth, but that could also change quickly, as past performance is not a good indicator of future performance. Since the financing structure is on the risky side, investors should be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for British American Tobacco only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 44 (better than 44% compared with alternatives), overall professional sentiment and engagement for the stock British American Tobacco is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for British American Tobacco. Analyst Opinions are at a rank of 66 (better than 66% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 59, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 59% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 29, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in British American Tobacco. There are also only so many institutional investors holding company stock with a Professional Investors rank of 47, which means that, currently, professional investors hold less stock in this company than in 53% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 44 (less encouraging than 56% compared with investment alternatives), British American Tobacco has a reputation among professional investors that is below that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more
Value Strategy: British American Tobacco Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 90 (better than 90% compared with alternatives) for 2023, British American Tobacco shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for British American Tobacco. Price-to-Profit (also referred to as price to earnings, P/E ratio) is 97 which means that the stock price compared with what market professionals expect for future profits is lower than for 97% of comparable companies, indicating a good value concerning British American Tobacco's profit levels. The same is valid for the expected Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 92, and for Dividend Yield with a Dividend Yield Rank of 100. But, compared with other companies in the same industry, the stock price is higher than average as regards expected revenues; only 78% of all competitors have an even higher stock price as regards to sales revenues (a Price-to-Sales Rank of 22). Profits, the level of invested capital, and dividend policy suggest that this stock is attractively priced. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 90, is a strong buy recommendation based on British American Tobacco's stock price compared with the company's operational size and dividend yields. Since it is on the expensive side for Price-to-Sales, it may mean that British American Tobacco has pricing power in its distribution market because it can charge higher prices than its competitors. If this is the case, all four value indicators are positive signals for purchasing British American Tobacco shares. ...read more
Growth Strategy: British American Tobacco Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 67 (better than 67% compared with alternatives), British American Tobacco shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, where half of the indicators are below and half above average for British American Tobacco. Profit Growth, with a rank of 69 (better than 69% of its competitors), and Capital Growth, with a rank of 79, are both positive, which is a healthy sign for positive development. But Sales Growth has only a rank of 29, which means that, currently, professionals expect the company to grow less than 71% of its competitors, and Stock Returns are at a rank of 23. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 67, is a BUY recommendation for growth and momentum investors. Stock returns that are a thing of the past can be less of a problem. Below-average revenue growth may be caused by divestments of underperforming businesses. If that is the case, then the positive developments of profit and capital growth are signs of a company with growth potential. If these are the reasons, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: British American Tobacco Debt Financing Safety below-average
| SAFETY METRICS | June 22, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 51 |
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| REFINANCING | ||||||||
| REFINANCING | 20 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 32 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 32 |
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ANALYSIS: With an Obermatt Safety Rank of 32 (better than 32% compared with alternatives), the company British American Tobacco has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of British American Tobacco is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for British American Tobacco and the other two below average. Leverage is at a rank of 51 meaning the company has a below-average debt-to-equity ratio. It has less debt than 51% of its competitors.Refinancing is at a rank of 20, which means that the portion of the debt about to be refinanced is above-average. It has more debt in the refinancing stage than 80% of its competitors. Liquidity is at a rank of 32, meaning that the company generates less profit to service its debt than 68% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 32 (worse than 68% compared with alternatives), British American Tobacco has a financing structure that is riskier than that of its competitors. This is an indication that the company is on the riskier side when it comes to debt service. There is only below-market average liquidity, and a short-term refinancing issue might be around the corner. But in the long-term, the debt levels of British American Tobacco are on the safer side. ...read more
Combined financial peformance: British American Tobacco Top Financial Performance
| COMBINED PERFORMANCE | June 22, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 90 |
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| GROWTH | ||||||||
| GROWTH | 67 |
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| SAFETY | ||||||||
| SAFETY | 32 |
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| COMBINED | ||||||||
| COMBINED | 82 |
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ANALYSIS: With an Obermatt Combined Rank of 82 (better than 82% compared with investment alternatives), British American Tobacco (Tobacco, United Kingdom) shares have much better financial characteristics than comparable stocks. Shares of British American Tobacco are a good value (attractively priced) with a consolidated Obermatt Value Rank of 90 (better than 90% of alternatives), show above-average growth (Growth Rank of 67) but are riskily financed (Safety Rank of 32), which means above-average debt burdens. ...read more
RECOMMENDATION: An Obermatt Combined Rank of 82, is a strong buy recommendation based on British American Tobacco's financial characteristics. As the company British American Tobacco's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 90) and above-average growth (Obermatt Growth Rank of 67), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 32) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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