British American Tobacco p.l.c.

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

British American Tobacco p.l.c. trades at $62.3, in a confirmed uptrend and 97 weeks into that stage. That is +6.6% against its own 200-day average. It sits at 78% of a 52-week range of $51 to $65. On relative strength it has been ahead of the S&P 500 on a trailing-13-week view for 3 straight weeks.

Today the stock is in a confirmed uptrend — week 97 of stage 2. At $62.3 it trades +6.6% versus its 200-day average and sits at 78% of its 52-week range ($51–$65).

Against the market, two honest reads. Cumulative: over the last 10.1 years the stock moved −2% while the S&P 500 moved +248% — behind the index over the full window. Recent form: on a trailing-13-week view the stock has been ahead for 3 straight weeks — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

→ The trend is one thing; the bill is another. Are you paying up for it? Next: the P/E sits at the 99th percentile of its own range.

Valuation P/E is the price of $1 of annual profit: how many dollars the market pays for each dollar the company earns in a year.

British American Tobacco p.l.c. trades at 13.0× P/E, about the priciest it has ever traded. Its long-run median P/E is 6.4×, measured across 8.6 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 13.0× is about the priciest it has ever traded, against a long-run median of 6.4× measured over 8.6 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year annual EPS moved +156.7% against a +19.2% price move — earnings outran the price, pushing the multiple DOWN its own range.

The price move, decomposed: over 5y, of the +10.7%/yr price move, ~−2.4%/yr came from earnings growth and ~+13.1 pp from the multiple (expanding). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is full against its own past, so the story rests on the earnings line underneath it, not the multiple.

→ Cheap or dear rides on the earnings. Are they actually growing? Next: the fundamental stage — where the business sits in its arc, and how growth has compounded.

Stage: Deteriorating Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

British American Tobacco p.l.c. reads as deteriorating on its fundamental arc. Deteriorating — revenue, profit and EPS growth are shrinking (revenue growth −6.3% latest against +27.5% at its 12-quarter best), ROCE holding at 12.9%. The read is built from 12 quarters across 4 curves, on full evidence.

🚨 Why it matters: falling curves mean every cheap-looking ratio below needs a discount for direction.

→ The stage names the trajectory. Next: the revenue line that produces it, quarter by quarter.

4-Factor Sector Score

55.6/100 — rank 5 of 6 in Tobacco · 40% evidence confidence · provisional, ranked below fully-evidenced peers

British American Tobacco p.l.c. scores 55.6 out of 100 against the 6 companies it is compared with in Tobacco, ranking 5. Fill the missing evidence before acting; the ranking is deliberately pulled toward neutral.

The four contributions add to the total exactly: 18.4 + 10.2 + 11.5 + 15.5 = 55.6. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if profit growth turns negative or margin improvement reverses while sector-relative strength deteriorates.

Revenue Revenue is the top line: everything the company billed its customers in the period.

British American Tobacco p.l.c. reported $13.5 B of revenue in the Dec 25 quarter, +0.1% year on year. Over 4 years it has compounded at −0.1% a year. The last full year, FY25, came in at $25.6 B. The last four reported quarters add to $51.5 B.

British American Tobacco p.l.c. reported $13.5 B of revenue in the Dec 25 quarter, +0.1% year on year. Over 4 years it has compounded at −0.1% a year. The last full year, FY25, came in at $25.6 B. The last four reported quarters add to $51.5 B.

FY25 revenue came in at $25.6 B (−1.0% on the year), capping 4 years at −0.1% compound. The latest quarter (Dec 25) printed $13.5 B, +0.1% year on year.

Pace check: the last four quarters averaged −3.1% growth against the decade's −0.1% — the current year is running slower than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew −6.3% over the last 4 quarters against +0.0%/yr over the last 8 — rolling over.

→ Revenue grew — did margins hold as it scaled? Next: 36.4% this quarter (+47.6 pp YoY).

Operating margin Operating margin is what is left of every $100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

British American Tobacco p.l.c.'s operating margin is 36.4% in the Dec 25 quarter, +47.6 percentage points against the same quarter a year ago. Across the last four quarters the operating margin has moved +193.1 percentage points. Across 5 fiscal years the operating margin has ranged −57.7% to 39.8%. The current quarter sits inside that band.

British American Tobacco p.l.c.'s operating margin is 36.4% in the Dec 25 quarter, +47.6 percentage points against the same quarter a year ago. Across the last four quarters the operating margin has moved +193.1 percentage points. Across 5 fiscal years the operating margin has ranged −57.7% to 39.8%. The current quarter sits inside that band.

The latest quarter's operating margin is 36.4%, +47.6 pp against the same quarter a year ago. Across 5 fiscal years the operating margin has ranged −57.7%–39.8%.

Why the margin moved: operating margin went +193.1 pp year on year while gross margin went −1.6 pp — the gain came mostly below the gross line: operating leverage, with costs spread over a bigger revenue base.

→ Margins held — did that reach the bottom line? Next: profit null in the latest quarter.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

British American Tobacco p.l.c. earned $3.2 B of net profit in the Dec 25 quarter. Full-year FY25 profit was $7.8 B. The 4-year compound rate is 2.7%. That is 23.6% of the quarter's revenue. The same quarter a year earlier lost $18.2 B. 2 of the last 12 reported quarters were loss-making.

British American Tobacco p.l.c. earned $3.2 B of net profit in the Dec 25 quarter. Full-year FY25 profit was $7.8 B. The 4-year compound rate is 2.7%. That is 23.6% of the quarter's revenue. The same quarter a year earlier lost $18.2 B. 2 of the last 12 reported quarters were loss-making.

Dec 25 profit was $3.2 B, null year on year. On the full year, FY25 printed $7.8 B (+144.0%), and the 4-year compound rate is 2.7%.

→ Profit rose — but did the cash follow? Next: 151% of the last 3 years' profit arrived as cash.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 151% of British American Tobacco p.l.c.'s reported profit arrived as operating cash — the cash follows the profit. In FY25 that was $6.3 B of operating cash against $7.8 B of profit. After $0.6 B of capital spending, $5.8 B was left as free cash.

FY25: operating cash of $6.3 B against reported profit of $7.8 B, leaving free cash of $5.8 B after $0.6 B of capital spending. Across the last 3 fiscal years the conversion rate is 151% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

Why: conversion is measured cleanly, but the working-capital day-counts behind it sit below what we hold — the move is shown without inventing its driver.

Router verdict: the visible cash user is investment — the next section checks what the spending is buying.

→ So follow the cash to where it goes. Next: $2.0 B of building over 3 years.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

British American Tobacco p.l.c. does not report the debtor, inventory and payable day-counts a cash cycle is built from, so this section reads the investment side instead. Capital spending ran $2.0 B over the last 3 years. Averaged over those years that is 2.6% of FY25 revenue a year.

Working-capital day-counts are not in our numbers for this stock, so this section reads the investment side — where the cash is being put to work.

On the investment side: capital spending of $2.0 B over the last 3 fiscal years.

The synthesis: the cash is going into capacity, not disappearing into the cycle — the question becomes whether the new capacity earns.

→ Does all this activity actually earn its cost of capital? Next: ROE is 16% and the ROIC − WACC spread is +5.0 pp.

Return on equity Return on equity (ROE) is the profit the business earns on its shareholders’ money. With the full capital-employed split not in our numbers, ROE is the cleanest long ladder we can draw here.

British American Tobacco p.l.c. earns a ROE of 16% in FY25. That is up from a trough of −27% in FY23. Return on invested capital clears the cost of that capital by +5.0 percentage points, so growth here adds value rather than only size. The wiring behind it is 30.3% net margin on 0.23× asset turns.

FY25 ROE is 16%, recovered from a FY23 trough of −27% — the full ladder below shows the fall and the climb, undoctored.

Why the return is what it is — the wiring (FY25): 30.3% net margin × 0.23× asset turns × 2.27× balance-sheet leverage ≈ 15.8% on equity. Margin is doing the heavy lifting; leverage is a meaningful part of the equation.

The capstone test — ROIC − WACC: 9.7% − 4.7% = a +5.0 pp spread. The 4.7% is an estimate of this company's own cost of capital — read the sign and the size of the spread, not the decimals. Positive but thin — value creation with little room for error.

→ Returns like these — is the balance sheet borrowing to make them? Next: debt-to-equity is 0.73.

Dividend

British American Tobacco p.l.c. pays no dividend. Across the last 12 reported quarters it has declared no dividend per share, so there is no payout history to chart and no yield to quote. Companies at this stage typically reinvest earnings rather than distribute them, which makes the cash-flow and reinvestment sections the place that cash shows up.

British American Tobacco p.l.c. does not currently pay a dividend. Across the last 12 reported quarters the company has declared no dividend per share, so there is no payout history to chart and no yield to quote. Companies at this stage typically reinvest earnings instead of distributing them.

→ No payout to follow. The cash question becomes what the business does with what it earns instead.

Debt Debt-to-equity says how much of the business is funded by borrowings; interest cover says how many times operating profit pays the interest bill. Low and high, respectively, is the safe corner.

Debt-to-equity is 0.73 at the latest reading — modestly levered; a full borrowings history is not in our numbers.

We hold only the latest reading here: a debt-to-equity of 0.73 — a modest level of leverage behind the returns above. A year-by-year borrowings ladder is not in our numbers for this stock, so we say that rather than draw a chart we cannot support.

→ Who owns this, and are they adding or leaving? Next: the register.

Ownership There is no quarter-by-quarter holder register to read here, so we read the crowd through short interest — the slice of tradable shares currently sold short, positioned for a fall.

No ownership or positioning reading is held for British American Tobacco p.l.c., so this section names the gap rather than filling it. At typical trading volumes those positions would take about 1.6 days to buy back. There is no quarter-by-quarter holder register to read for this filer, so the crowd is read through short interest instead.

We hold no ownership or positioning reading for this stock, so this section says that plainly.

→ One last check: does the safety math agree? Next: the balance-sheet safety line.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

British American Tobacco p.l.c.: the Z-score reads 1.64. A Z-score above roughly 3 reads as safe and below roughly 1.8 as the distress zone, so this sits inside the distress zone. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure.

🚨 Why it matters: a Z-score of 1.64 is inside the distress zone — the balance sheet is a real risk, not a detail.

The safety line in one sentence: the Z-score reads 1.64.

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