British American Tobacco p.l.c. (BTI) Stock Valuation — PE Analysis
Tobacco · NYSE
Current Price
$62.32
PE Ratio (TTM)
13.0x
Intrinsic Value
$68.38
+8.9% margin of safety
COMPETITIVE MOAT
↑Brand Loyalty & Pricing Power
BTI's established brands like Dunhill and Pall Mall command significant consumer loyalty. This allows for consistent pricing power, even as traditional cigarette volumes decline.
↑Global Distribution Network
An extensive and entrenched global distribution network is a significant barrier to entry. It ensures product availability across diverse markets, a feat difficult for new entrants to replicate.
↑New Category Investment
Strategic investments in next-generation products, like the Charlotte's Web acquisition, position BTI for future growth. This diversification mitigates reliance on declining traditional segments.
INVESTMENT RISKS
↓Regulatory Scrutiny & Policy Shifts
Intensifying regulatory pressure, including US Senate inquiries into lobbying, poses a significant threat. Potential FDA policy shifts could impact product offerings and profitability.
↓Declining Traditional Volume
The company's own outlook indicates a further reduction in global cigarette volumes. This ongoing secular decline necessitates successful transition to new categories.
↓Execution of New Category Strategy
The success of BTI's pivot to new categories, such as the Charlotte's Web investment, hinges on effective integration and market acceptance. Failure here could hinder future growth.
Base case
BTI base case PE valuation
A base case PE valuation for BTI estimates a fair value of about $68.38 per share, against a current price of $62.32. The model assumes 4.3% annual earnings growth, a 13x target PE multiple, and a 10% discount rate.
Intrinsic Value
$68.38
Margin of safety
+8.9%
Expected annual return
+1.9%
Base case assumptions: 4.3% annual earnings growth, 13x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the BTI PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for British American Tobacco p.l.c. respond.
Open PE Calculator for BTICompany Overview
British American Tobacco p.l.c. (BTI) is a global enterprise that supplies a diverse portfolio of tobacco and nicotine products to consumers across the Americas, Europe, the Asia-Pacific region, the Middle East, Africa, and the United States. Its offerings span modern alternatives like vapor, heated tobacco, and contemporary oral nicotine products, alongside traditional combustible cigarettes and conventional oral tobacco options such as snus and moist snuff. The company markets these items under renowned brand names including Vuse, glo, Velo, Grizzly, Kodiak, Dunhill, Kent, Lucky Strike, Pall Mall, Rothmans, Newport, Natural American Spirit, and Camel. Distribution of its products primarily occurs via retail channels. Established in 1902, British American Tobacco p.l.c. is headquartered in London, United Kingdom.
Financial Metrics — BTI PE Stock Valuation Data
PE Ratio (TTM)
13.0x
PEG Ratio
0.08
Earnings Yield
7.70%
ROE (TTM)
16.3%
Revenue/Share (TTM)
$11.76
Dividend Yield
5.23%
Debt/Equity
0.75x
Frequently Asked Questions
What is the PE ratio of BTI?
The trailing twelve-month PE ratio of BTI reflects how much investors pay per dollar of British American Tobacco p.l.c.'s earnings. This metric is most useful when compared to Tobacco peers and the company's own historical range.
Is BTI overvalued based on PE ratio?
BTI's PE of 13.0x combined with a PEG ratio of 0.08 provides a growth-adjusted perspective. A PEG below 1.0 suggests BTI may be undervalued relative to its earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Tobacco, a DCF analysis may be more appropriate.
How do I value BTI stock using PE ratio?
To value British American Tobacco p.l.c. using PE: (1) Compare the current PE (13.0x) against the Tobacco median to assess relative pricing, (2) check the PEG ratio (0.08) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of BTI?
BTI's PEG ratio is 0.08, calculated by dividing the PE ratio (13.0x) by the expected earnings growth rate. A PEG below 1.0 is traditionally considered a sign of undervaluation — the market may not be fully pricing in the growth potential. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for BTI stock valuation?
PE ratio gives a quick relative read — how BTI is priced versus Tobacco peers. DCF provides an absolute value based on projected free cash flows. For BTI, with a strong ROE of 16.3%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See BTI DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Consumer Defensive valuationsP/E and DCF value BTI with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.