Emerging Markets Continue to Fuel Imperial Tobacco

Despite weakness in Spain, Imperial Tobacco continues to show a resiliency in core markets and strength across emerging markets

Morningstar Equity Analysts 22 September, 2011 | 9:03AM

Imperial Tobacco's (IMT) full-year trading update confirmed a continuation of recent trends, including resiliency in core markets thanks to a value-focused product portfolio and strength across emerging markets in Asia and Eastern Europe. In aggregate, the firm expects total revenue to increase 2% for the full year (using constant currencies) despite a collective 2% decrease in cigarette and fine-cut tobacco volume, slightly ahead of our expectations but not material enough to revise to our fair value estimates. Spain--where Imperial controls about 30% of the tobacco market--remains an area of weakness because of macroeconomic and regulatory pressures.

After rallying the past few weeks, Imperial's stock trades just below our fair value estimate but remains the most attractively valued tobacco name in our coverage list, along with Lorillard (LO).

This is an excerpt from the Morningstar Research Report for Imperial Tobacco. Read the full report here. Morningstar Research is available to Premium subscribers.

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Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Imperial Tobacco Group PLC2,674.00 GBX-1.15
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