Imperial Tobacco Clear Choice for Income Seekers

THE INCOME INVESTOR: Imperial Tobacco is undervalued, has today posted positive results - and yields 4.2%. We examine the stock backed by income king Neil Woodford

Philip Gorham 19 August, 2014 | 11:09AM
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Imperial Tobacco's (IMT) interim management statement for the nine months ending June 30 2014 suggested that business is on track to meet our full-year expectations.

Under CEO Alison Cooper, Imperial is slowly transforming from an also-ran – albeit a highly profitable one – to a significant player and potential consolidator in the global tobacco industry. 

Though details in the release were scarce, we believe the outperformance of the Growth Brands lends support to our wide economic moat rating, which is based on the strength of some of Imperial's brands, the addictiveness of its products, and its cost advantage through economies of scale. We regard these as a solid set of results. We think Imperial is positioned for the economic recovery in Europe, and we think there is modest upside to the current share price.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
British American Tobacco PLC2,653.50 GBX-0.17Rating
Imperial Brands PLC1,535.00 GBX-0.58Rating
Philip Morris International Inc101.82 USD0.36Rating

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Philip Gorham  

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