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British American Tobacco: Dividend Yield Back To 8% After H1 Results

Published Tue, 04 Aug 2020 19:26:09 -0400 on Seeking Alpha

Seeking AlphaDividend Ideas | United KingdomBritish American Tobacco: Dividend Yield Back To 8% After H1 ResultsAug. 4, 2020 7:26 PM ET|| About: British American Tobacco p.l.c. (BTAFF), BTI, Includes: IMBBF, IMBBY, MO, PM, SWMAF, SWMAYby: Librarian CapitalLibrarian Capital Hedge fund analyst, long/short equitySummaryBritish American Tobacco shares fell 5% in London on Friday after H1 results, despite solid numbers and few surprises vs. the June update.
In H1, EPS grew 5.7% year-on-year; excluding currency, EPS grew 6.6%, from revenues growing 2.4% and operating profit growing 3.3%.
The U.S. cigarette market (52% of group operating profit) remains healthy, with stable volume trends and moderate growth in e-vapor.
Outside the U.S., the company had only mediocre growth in Next Generation Products, except in modern oral tobacco in the Nordics.
At 2,550p, even with 2.5% EPS growth and no re-rating, annualised returns will likely be in low teens (including an 8.3% Dividend Yield).
British American Tobacco (NYSE: BTI) (referred here as "BAT") shares fell 5% in London on Friday after H1 2020 results, despite the company presenting solid numbers and few surprises versus their June update. In GBP, the shares are now back to the level in March when we upgraded our rating to Buy, though the total return (including dividends) has been 4.5% (in GBP, 17% in USD):
Librarian Capital BAT Rating History

Source: Seeking Alpha (04-Aug-20).

Buy Case Recap
Our Buy rating in March was based on BAT's business delivering at least a low-single-digit EPS growth in the medium term, with the following assumptions:
The U.S. cigarette market (45% of 2019 operating profit) to stabilise, with the growth in e-vapor to be sharply lower after FDA actions Non-U.S. cigarette markets to also remain relatively stable, despite BAT being behind in Tobacco Heated Products ("THP") and Juul expanding its e-vapor business in Europe BAT to be successful in its... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ALTRIA GROUP 44.46   13.2 3.36 3.36 7.23
PHILIP MORRIS INTERNATIONAL 74.90   14.9 5.03 4.68 6.12
IMPERIAL BRANDS 27.17   0.0 0.00 0.00 0.00
SWEDISH MATCH AB 21.73   0.0 0.00 0.00 0.00


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