Tobacco Firm Imperial Undervalued Despite Dividend Rise

Imperial's strong brand presence in Europe could help its move into the vapour-releasing heated tobacco industry

Philip Gorham 7 November, 2017 | 2:23PM

Imperial Brands cigarettes

Imperial Brands' (IMB) latest full year results today demonstrated on a number of levels why the firm is Morningstar equity analysts’ pick of the European consumer staples group. Modest outperformance on the top line, the surprise announcement of an entry into heated tobacco, respectable performance in challenging markets, and continued capital discipline all support our investment thesis. Analysts continue to believe Imperial is undervalued.

We have raised our sales forecasts higher and made our margin assumptions slightly lower and retain our £39.00 fair value estimate. The immediate market reaction has been positive but muted, which probably reflects concerns over short-term profit margins, after the firm announced incremental investments in next-generation products, and also some irrational scepticism over Imperial's growth opportunity in its broader portfolio despite being late to the game in heated tobacco.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
British American Tobacco PLC2,920.00 GBX-4.22
Imperial Brands PLC1,405.00 GBX-2.43
Philip Morris International Inc70.14 USD-2.99

About Author

Philip Gorham  

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies