Is FTSE 100 Stalwart British American Tobacco a Good Value?

Capital gains, of course, the goal of many investors. One way of achieving this is to buy a company with steady growth. If you bought when the shares are cheap, two drivers could move the share price up:

• Revenue growth

• Up P / E rerating

Highly successful fund manager Peter Lynch classified as stable lads manufacturers, which he usually traded at 20% to 50% of the price increase. But whether to buy to benefit as that of the long-term, we need to know if a reliable earnings growth can continue, and whether the stock is cheap.

Not all companies achieve sustainable growth, as you can see on the aggregate performance of those in the primeLondonthe FTSE 100, with the total annual income, the growth rate was only 0.7% over the past five years:

In keeping cash flow supported by earnings growth is a promising feature in today’s markets it is, for this series, I’m considering companies with annual revenue growth of 4% to 20%.

One contender is British American Tobacco (LSE: BATS) (NYSEMKT: BTI), a tobacco company founded in 1902 as a joint venture between UC Imperial Tobacco Company and the American Tobacco Company. He is second only to Philip Morris cigarette in the world markets. This table is a recent financial report of the company:

Thus, profit rose 15.9% for the equivalent compound annual growth rate, putting bats in the rack category.

In the management of a statement made on 24 October, the bats of Directors confirmed the continuation of the steady progress of the company, despite the heat of the difficult macroeconomic news hanging over us and the decline of the industry.

BATS to get its product to consumers craving cigarettes at 46 plants in 39 countries, some packaged in any of the 300-plus brands. About 27% of the turnover comes from the Asia-Pacific region, 27% from Eastern Europe, Middle East and Africa, 23% from theAmericas, and 23% fromWestern Europe.

There’s never been a problem with customer retention for re-purchase of products, tobacco companies produce, even though all of their client’s life experience shows some signs of weakness in comparison to other industries - burn rates are faster. That is why the company has invested so much effort in new customers smoked and rolled his stake to marketing irresistible offer, which seems to set fire to the desires of consumers and the established and emerging markets around the world.

If the bats can keep converting it frequently recurring income in income, further growth is likely, and it is sure to light up investors.

British American Tobacco earnings growth and value assessment

I analyze the five indicators to determine the revenue growth can continue, and if the shares offer good value:

1. Growth: revenue, profit and cash flow is increasing. 5/5

2. Levels of debt: At last count, net leverage was approximately 128%. 3/5

3. Prospects and current trading: Good recent trading and cautiously positive outlook. 4/5

4. The enterprise value of the free cash flow: Front 22 and above historical growth rates. 2/5

5. Prices for profit: Trailing around 17 and around the historical growth rates. 3/5

In general, I scored 17 out of 25 BATS, which encourages me to believe it can continue to grow tall income, which is ahead of that broader FTSE 100. Compared price-to-earnings ratio FTSE, which is about 11 and the growth of the firm forecasts, stocks seem to price in future earnings growth expectations.

BATS have a record of sustained growth in the most important financial ratios and debt seems to be reasonable. Sustainable growth is an attractive and cost indicators show that investors turned their heads here.

Right now, the forecast revenue growth of 9% in 2013, and forward P / E ratio is about 14.5 with shares in 3262 pence. Given that other factors analyzed in this article, I think that bats looks fairly priced for its shares.

British American Tobacco is one of several fixed income, growing lads on the London Stock Exchange, each of which can have a significant capital gains by purchasing at reasonable prices.

If you, like me, are serious capital gains, I recommend you now read “The One UK Share Warren Buffett likes”, which is a time-limited free Motley Fool report discussing British rack that has recently attracted someU.S.super-investor billions.

Leave a Reply

Your email address will not be published. Required fields are marked *

To prove you're a person (not a spam script), type the security word shown in the picture. Click on the picture to hear an audio file of the word.
Anti-spam image