British American Tobacco p.l.c.

LSE:BATS Stock Report

Market Cap: UK£61.8b

British American Tobacco Valuation

Is BATS undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of BATS when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: BATS (£28.03) is trading below our estimate of fair value (£66.69)

Significantly Below Fair Value: BATS is trading below fair value by more than 20%.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for BATS?

Key metric: As BATS is unprofitable we use its Price-To-Sales Ratio for relative valuation analysis.

The above table shows the Price to Sales ratio for BATS. This is calculated by dividing BATS's market cap by their current revenue.
What is BATS's PS Ratio?
PS Ratio2.4x
SalesUK£26.18b
Market CapUK£61.84b

Price to Sales Ratio vs Peers

How does BATS's PS Ratio compare to its peers?

The above table shows the PS ratio for BATS vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PSEstimated GrowthMarket Cap
Peer Average2.4x
IMB Imperial Brands
1.1x-12.5%UK£19.6b
DGE Diageo
3.3x3.2%UK£52.6b
ABF Associated British Foods
0.8x3.6%UK£16.6b
MO Altria Group
4.6x1.0%US$93.6b
BATS British American Tobacco
2.4x1.9%UK£61.8b

Price-To-Sales vs Peers: BATS is good value based on its Price-To-Sales Ratio (2.4x) compared to the peer average (2.4x).

Price to Sales Ratio vs Industry

How does BATS's PS Ratio compare vs other companies in the Global Tobacco Industry?

10 CompaniesPrice / SalesEstimated GrowthMarket Cap
BATS 2.4xIndustry Avg. 2.2xNo. of Companies10PS01.63.24.86.48+
10 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Sales vs Industry: BATS is expensive based on its Price-To-Sales Ratio (2.4x) compared to the Global Tobacco industry average (2.2x).

Price to Sales Ratio vs Fair Ratio

What is BATS's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

BATS PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio2.4x
Fair PS Ratio8.5x

Price-To-Sales vs Fair Ratio: BATS is good value based on its Price-To-Sales Ratio (2.4x) compared to the estimated Fair Price-To-Sales Ratio (8.5x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst BATS forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUK£28.03
UK£31.30
+11.6%
18.7%UK£44.00UK£25.00n/a10
Nov ’25UK£27.05
UK£31.30
+15.7%
18.7%UK£44.00UK£25.00n/a10
Oct ’25UK£27.55
UK£32.42
+17.7%
17.3%UK£44.00UK£25.50n/a11
Sep ’25UK£28.36
UK£32.09
+13.1%
17.2%UK£44.00UK£25.00n/a13
Aug ’25UK£27.97
UK£31.63
+13.1%
18.0%UK£44.00UK£25.00n/a13
Jul ’25UK£24.51
UK£31.26
+27.5%
19.0%UK£44.00UK£24.00n/a13
Jun ’25UK£24.15
UK£31.34
+29.8%
18.8%UK£44.00UK£24.00n/a13
May ’25UK£23.49
UK£31.68
+34.9%
19.7%UK£44.00UK£24.00n/a13
Apr ’25UK£24.06
UK£31.61
+31.4%
19.7%UK£44.00UK£24.00n/a13
Mar ’25UK£23.35
UK£31.63
+35.5%
19.1%UK£44.00UK£24.00n/a14
Feb ’25UK£23.40
UK£31.22
+33.4%
18.9%UK£44.00UK£24.00n/a13
Jan ’25UK£22.96
UK£31.69
+38.1%
17.8%UK£43.00UK£23.00n/a15
Dec ’24UK£25.08
UK£35.06
+39.8%
15.4%UK£47.00UK£27.50n/a15
Nov ’24UK£24.75
UK£35.19
+42.2%
15.0%UK£47.00UK£27.50UK£27.0515
Oct ’24UK£25.77
UK£35.13
+36.3%
14.9%UK£47.00UK£27.50UK£27.5515
Sep ’24UK£26.08
UK£35.37
+35.6%
14.6%UK£47.00UK£27.50UK£28.3616
Aug ’24UK£26.13
UK£35.56
+36.1%
14.4%UK£47.00UK£27.50UK£27.9716
Jul ’24UK£26.08
UK£35.93
+37.8%
13.8%UK£47.00UK£27.50UK£24.5116
Jun ’24UK£25.58
UK£37.71
+47.4%
11.5%UK£47.00UK£28.00UK£24.1516
May ’24UK£29.27
UK£38.12
+30.2%
9.0%UK£47.00UK£31.00UK£23.4917
Apr ’24UK£28.41
UK£38.30
+34.8%
8.7%UK£47.00UK£31.00UK£24.0617
Mar ’24UK£31.30
UK£38.53
+23.1%
7.3%UK£47.00UK£35.00UK£23.3518
Feb ’24UK£31.17
UK£39.75
+27.5%
7.7%UK£47.00UK£35.00UK£23.4018
Jan ’24UK£32.82
UK£40.32
+22.9%
8.4%UK£48.00UK£35.00UK£22.9618
Dec ’23UK£33.91
UK£40.39
+19.1%
8.4%UK£48.00UK£35.00UK£25.0818
Nov ’23UK£34.65
UK£41.19
+18.9%
9.2%UK£48.00UK£35.00UK£24.7518

Analyst Forecast: Target price is less than 20% higher than the current share price.

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