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Imperial Brands PLC IMB

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Stock XLON Rating as of
GBX 2,044.00 −11.00 (0.54%)
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Imperial Brands: Cutting Long-Term Growth Outlook Due to Fast-Follower Strategy; Still Undervalued

Kristoffer Inton

We’ve reduced our long-term growth forecast for Imperial Brands to more accurately reflect the company’s focus on maximizing cash flow at the cost of reduced investment in next-generation productions. Our fair value estimate falls to GBX 2,300/$29 from GBX 2,900/$36. This implies a 2024 price/adjusted earnings ratio of 9.5 times, enterprise value/adjusted EBITDA of 7.5 times, and 6.5% dividend yield. These multiples are at the lower end of the tobacco peer group due to Imperial's weaker long-term growth from its fast-follower strategy.

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Price vs Fair Value

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IMB is trading at a 655% premium.
Price
GBX 2,055.00
Fair Value
GBX 1,838.00
Uncertainty
Medium
1-Star Price
GBX 5,561.00
5-Star Price
GBX 7,135.00
Economic Moat
Xytt
Capital Allocation
Ysqdflvzq

Bulls Say, Bears Say

Bulls

Imperial’s strategy to focus on its strongest markets and categories stands to maximize margins and free cash flow generation.

Bears

Imperial’s international exposure creates significant currency risk since much of its debt is denominated in US dollars. A strengthening US dollar can hurt the firm's ability to service debt.

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Trading Information

Previous Close Price
GBX 2,055.00
Day Range
GBX 2,043.00–2,064.00
52-Week Range
GBX 19.68–2,077.00
Bid/Ask
GBX 2,044.00 / GBX 2,045.00
Market Cap
GBX 1.75 Tril
Volume/Avg
552,430 / 2.9 Mil

Key Statistics

Price/Earnings (Normalized)
7.63
Price/Sales
0.58
Dividend Yield (Trailing)
7.19%
Dividend Yield (Forward)
7.19%
Total Yield
13.51%

Company Profile

Imperial Brands is the world's fourth-largest international tobacco company (excluding China National Tobacco), with total fiscal 2023 volume of 198 billion cigarettes sold in more than 120 countries. Its largest markets are the UK, Germany, France, and the US (where it sits as the third-largest manufacturer, following its acquisition of the Winston and Blu brands). The firm also holds a leading global position in the fine-cut tobacco and hand-rolling paper categories. It has a logistics platform in Western Europe, Altadis.
Sector
Consumer Defensive
Industry
Tobacco
Stock Style Box
Large Value
Total Number of Employees
25,200
Website
https://www.imperialbrandsplc.com

Competitors

Valuation

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Metric
IMB
BTI
PM
Price/Earnings (Normalized)
 7.636.6816.54
Price/Book Value
 3.951.08—
Price/Sales
 0.582.064.38
Price/Cash Flow
 6.685.9814.80
Price/Earnings
IMB
BTI
PM

Financial Strength

Metric
IMB
BTI
PM
Quick Ratio
 0.270.430.41
Current Ratio
 0.640.910.94
Interest Coverage
 3.09−8.147.42
Quick Ratio
IMB
BTI
PM

Profitability

Metric
IMB
BTI
PM
Return on Assets (Normalized)
 8.68%6.03%14.54%
Return on Equity (Normalized)
 46.93%12.92%—
Return on Invested Capital (Normalized)
 21.76%9.03%25.19%
Return on Assets
IMB
BTI
PM
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Tobacco Industry Comparables

Screen With Investor
1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Philip Morris International Inc
PM
DtpfxbgbjZrtzk$157.7 Bil
 Altria Group Inc
MO
GtqggRqjt$78.9 Bil
 British American Tobacco PLC
BTAFF
—Hfdfq$69.7 Bil
 British American Tobacco PLC ADR
BTI
GxgtbkyLyjq$69.7 Bil
 Japan Tobacco Inc
JAPAF
—Nwgl$49.2 Bil
 Japan Tobacco Inc ADR
JAPAY
—Hjhjq$49.2 Bil
 Imperial Brands PLC
IMBBF
—Wnnsrbz$22.4 Bil
 Imperial Brands PLC ADR
IMBBY
FgysnmwyjLscrz$22.4 Bil
 Smoore International Holdings Ltd Ordinary Shares
SMORF
—Dwxbln$6.8 Bil
 PT Hanjaya Mandala Sampoerna Tbk
PHJMF
—Zjvlq$5.2 Bil

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