British American Tobacco Plc And Imperial Brands Plc - Where Are These Two FTSE 100 Tobacco Stocks Heading After US FDA Announcements?

  • Jan 06, 2020 GMT
  • Team Kalkine
British American Tobacco Plc And Imperial Brands Plc - Where Are These Two FTSE 100 Tobacco Stocks Heading After US FDA Announcements?

On 2nd January 2020, the Food and Drug Administration (FDA) of the United States of America issued a press release regarding finalisation of enforcement policy on unauthorised flavoured cartridge-based e-cigarettes and e-vapes as well as other electric tobacco-based products that are consumed by and have a fascination for the youth and children. The FDA stated that as per the policy norms, organisations, that do not stop the production and selling of any illegal and unauthorised flavoured cartridge-based e-vapes (with the exception of menthol and tobacco) within 30 days of the issue of the statement will be liable for the FDA enforcement actions and sanctions. This decision has been taken as a response against the recent developments on the usage of e-cigarettes by children. A report titled “National Youth Tobacco Survey 2019 Results” reported that around 5 million US middle and high school students use e-vapes and other unauthorised electronic tobacco products in the last 30 days.

 

British American Tobacco Plc

British American Tobacco Plc (LON: BATS) is a London, United Kingdom-headquartered multinational tobacco and next-generation products company which is a part of the FTSE 100 index of the London Stock Exchange.  The company is one of the world’s biggest consumer goods companies and merchandises its products in more than 200 countries worldwide, covering six continents, and is a market leader in more than 50 countries. The four geographical reportable segments for the company are United States, Europe and North Africa (ENA), Asia-Pacific and Middle East (APME) and the Americas and Sub-Saharan Africa (AMSSA). In terms of product categories, the company has two broader categories, which are Cigarettes, and Potentially risk reduced products. The cigarette products of the company are driven by innovation with a wide variety of products, an example of which is the usage of tube filters. The company’s huge portfolio of brands includes some of the world leaders in this domain such as the likes of Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans.

BATS Latest News

In response to USFDA’s policy release, on 3rd January 2020, British American Tobacco Plc, issued a press release in which they welcomed the guidance from the Food and Drug Administration as a movement towards the sustainable regulatory environment for the United States e-cigarettes space. The company highlighted that it stands behind the FDA’s concerns of attraction of E-vape products to the youth and wants to address the irresponsible and aggressive marketing of these products. The company believes that the concerns and guidelines made by the FDA in its statement, as well its policies is a robust framework, that will enable and ensure that the e-tobacco products market regulations are effectively implemented. The company maintained that its subsidiary in USA Reynolds American Inc will comply with all the new flavour guidelines set out by the US Food and Drug Administration.

BATS Share Price Performance

(Source: Thomson Reuters) Daily Chart as on 06-January-20, prior to the closing of the London Share Exchange

As on 6th January 2020, at 08:30 A.M GMT, by the time of writing, British American Tobacco Plc’s share price was reported to have been trading at GBX 3332.80 per share on the London Stock Exchange, a decline in the value of 0.57 per cent or GBX 19.20 per share, in comparison to the previous day’s closing price, which was reported at GBX 3352.00 per share. While writing, the share of British American Tobacco Plc has been trading 48.19 per cent over the 52-week low share price, that was reportedly GBX 2249.00 per share, and this price was reached on May 17, 2019. At the time of writing, the share price has been reported to be 0.88 per cent below the 52-week high price of GBX 3362.50, which the share hit as on January 03, 2020. The company’s market capitalisation was reported at GBP 76.89 billion with regards to the current stock price.

The company’s annual dividend yield was reported to be at 6.06 per cent as at the time of writing, and the annual dividend, which was GBX 203.00 per share, is expected to be paid on February 06, 2020. British American Tobacco Plc’s share has displayed an upward change of approximately 34.69 per cent in value in the last one year, from the price of GBX 2474.50 that the shares achieved on January 07, 2019. The British American Tobacco Plc share has also displayed an upward change in the last six months of the year, of around 11.69 per cent from the share price of GBX 2984.00 that the British American Tobacco Plc’s share set on July 05, 2019. British American Tobacco Plc’s stock has depicted an upward change of 11.17 per cent, in the last one month from the price of GBX 2998.00 per share when the markets closed on December 06, 2019.

The beta of the stock of the company has been reported to be at a value of 1.4205. With the help of this, it can be gathered that the movement in the price of the stock of British American Tobacco Plc, is more volatile, as opposed to the movement of the comparative benchmark index in the previous one year.

Imperial Brands Plc

Imperial Brands Plc (LON: IMB) is a Bristol, the United Kingdom based consumer goods company, that is a part of the FTSE 100 Index of the London Stock exchange and is one of the biggest tobacco companies in the world. Imperial Brands Plc offers a variety of cigarettes, papers, smokeless tobacco and cigars as well. Its areas of operations are categorised into segments like growth markets, United States, Returns Market North, Returns Market South and Logistics. The group is engaged in the production and distribution of cigarettes and tobacco-related products. The company has a very wide brand base which includes the likes of Winston, Knox, Bastos, Kool, Rila Plus, Davidoff, John Player Special and Parker Simpson, amongst many others.

IMB Financial Performance and Latest News

On 5th November 2019, the company had announced its final results for the year ended 30th September 2019. The company had reported revenue growth of 5.1 per cent (actual basis) on year on year basis, but a decline of 26.2 per cent in Basic earnings per share. The company declared a dividend of GBX 206.6 per share for the year, which was a surge of 10 per cent as compared to the previous year.

Source: Company Website

The US Food and Drug Administration’s policy guidelines are also going to impact Imperial Brands Plc as one of the company’s subsidiaries Fontem Ventures has a strong presence in the Vape market in both the United Kingdom as well as the United States of America through its product, the Blu brand. The company’s response with regards to the FDA guidelines has been awaited, but it is expected that the company’s target market will contract in the futures post the guidelines being enforced.

IMB Share Price Performance

(Source: Thomson Reuters) Daily Chart as on 06-January-20, prior to the closing of the London Share Exchange

As on 6th January 2020, at 08:30 A.M GMT, by the time of writing, Imperial Brands Plc’s share price was reported to have been trading at GBX 1906.30 per share on the London Stock Exchange, a decline in the value of 0.83 per cent or GBX 15.90 per share, in comparison to the previous day’s closing price, which was reported at GBX 1922.20 per share. While writing, the share of Imperial Brands Plc has been trading 16.48 per cent over the 52-week low share price, that was reportedly GBX 1636.58 per share and was reached on December 11, 2019. At the time of writing, the share price has been reported to be 29.75 per cent below the 52-week high price of GBX 2713.50, which the shares hit as on February 20, 2019. The company’s market capitalisation was reported at GBP 18.191 billion with regards to the current stock price.

The company’s annual dividend yield was reported to be at 10.75 per cent as at the time of writing, and the annual dividend was GBX 206.57 per share. The company’s next dividend payment date is expected to be on March 31, 2020.

Imperial Brands Plc’s share has displayed a downward change of approximately 18.18 per cent in value in the last one year, from the price of GBX 2330.00 that the shares achieved on January 07, 2019. The Imperial Brands Plc share has also displayed a downward change in the last six months of the year, of around 2.78 per cent from the share price of GBX 1960.80 that the Imperial Brands Plc’s share set on July 05, 2019. Imperial Brands Plc’s stock has depicted an upward change of 11.26 per cent, in the last one month from the price of GBX 1713.40 per share when the markets closed on December 06, 2019.

The beta of the stock of the company has been reported to be at a value of 1.02. With the help of this, it can be gathered that the movement in the price of the stock of Imperial Brands Plc, is more volatile, as opposed to the movement of the comparative benchmark index in the previous one year.

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