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Should Value Investors Buy British American Tobacco (BTI) Stock?

Zacks Equity Research
·2 min read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is British American Tobacco (BTI). BTI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 5.95, while its industry has an average P/E of 9.35. Over the last 12 months, BTI's Forward P/E has been as high as 7.90 and as low as 5.86, with a median of 6.44.

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Investors should also note that BTI holds a PEG ratio of 1.17. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BTI's PEG compares to its industry's average PEG of 1.83. Over the past 52 weeks, BTI's PEG has been as high as 1.27 and as low as 1.14, with a median of 1.22.

These are only a few of the key metrics included in British American Tobacco's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BTI looks like an impressive value stock at the moment.

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British American Tobacco p.l.c. (BTI) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research