Buffett Brain · Research note
Score updated 23 Oct 2026
BATS.L· Consumer Staples
British American Tobacco p.l.c.
British American Tobacco's high margins are offset by low ROIC and questionable long-term durability in a declining industry.
Buffett fit
Weak fit
Owner
50
Durability
14
Management
62
Price
73
Score updated 23 Oct 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Consumer Staples stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned 100% of BAT, we'd be concerned about the declining revenue trend, with a 5-year CAGR of -2.53%.
The full reasoning comes with a free account.
The 10-year test reveals potential threats from regulatory changes and declining tobacco consumption.
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BAT's share count has decreased with a CAGR of -1.01%, indicating some .
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The of 12.8 and EV/ of 11.1 suggest a fair valuation, with an earnings yield of 7.82%.
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Read the full British American Tobacco p.l.c. analysis free
- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 183.5% , top-quintile in the Consumer Defensive sector.
- 245.5% , significantly above the sector top-quintile cutoff of 17.4%.
- 3Net margin of 30.3%, showcasing strong profitability.
- 4Strong brand with in a regulated industry.
Concerns
5- 15-year average of 2.5%, well below the sector top-quintile of 15.5%.
- 2Revenue CAGR of -2.53%, indicating a declining top line.
- 3Net debt/EBITDA of 2.25, slightly above Buffett's comfort level.
- 4Current ratio of 0.87, suggesting liquidity concerns.
Price history
$44.77+75.8%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
British American Tobacco (BAT) generates revenue primarily from tobacco and nicotine products, including cigarettes, vapour products, and nicotine pouches. The company operates globally, with a significant presence in the US and Europe. Despite a of 83.5% and an of 45.5%, the revenue has been declining, with a 5-year CAGR of -2.53%. The unit economics are strong on a margin basis, but the declining top line is concerning.
How this analysis has moved
The call has held across 3 reviews.
Sep 25, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Consumer Staples
Questions about British American Tobacco p.l.c.
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