Value
6.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.3 |
| P/S | 6.8 |
| Fwd P/E | 9.0 |
| PEG | 4.9 |
| Analyst target | 4.0 |
- ▸Forward P/E: 11.7x
- ▸PEG: 1.60
BTI · Why this verdict
Why British American Tobacco Indus (BTI) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Strong 30% margins and three earnings beats in the last four periods reflect genuine franchise quality, but near-stagnant revenue growth and a free cash flow conversion rate covering only 39% of net income raise questions about dividend sustainability — with just 7% headroom to the price target, the setup favors patience over adding exposure.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock is pulling back with the RSI at 35 — approaching oversold territory — while price remains above the 200-day moving average and on-balance volume continues to rise, suggesting this dip may represent a buying opportunity within a longer uptrend rather than the start of a reversal. Momentum breakdown | Price recovers toward the $65 resistance level within two quarters as the RSI mean-reverts above 50 without violating the 200-day moving average. | →Stable |
| CounterA declining RSI to 35 alongside mixed MACD signals may indicate selling pressure is still building; a break below the 200-day moving average would invalidate the uptrend argument and shift the technical picture to neutral or negative. | ||
Operating and net margins are strong at roughly 30%, the Piotroski financial-strength score reaches 7 out of 9, and the company has beaten earnings estimates in three of the last four quarters — a track record that supports the view of a financially resilient franchise capable of sustaining its income stream. Quality breakdown | Margins hold above 25% and earnings beats continue in at least 3 of the next 4 quarters, reinforcing the consistency argument and supporting the current multiple. | →Stable |
| CounterStrong margins and balance-sheet health do not compensate for a revenue base that is barely growing — any margin compression on a flat top line quickly turns the earnings picture negative and removes the primary quality argument. | ||
Revenue growth is near-stagnant — the growth dimension scores among the weakest in the overall profile — leaving little room for earnings expansion if margins face any pressure and creating a ceiling on the multiple the market is likely to assign. Growth breakdown | This pillar is falsified if revenue growth re-accelerates to a sustained rate above 5% year-over-year for 2 consecutive quarters, meaningfully upgrading the growth profile. | →Stable |
| CounterMature consumer-defensive franchises often command stable multiples precisely because of predictability; stagnant revenue may already be fully priced in and does not necessarily act as a fresh de-rating catalyst. | ||
Free cash flow covers only 39% of net income — a significant gap flagged as a red flag — raising questions about whether reported earnings translate into the cash needed to sustain the dividend, with the yield already noted as a potential trap. Catalyst breakdown | Free cash flow as a percentage of net income recovers above 70% over the next four quarters, providing a firmer foundation for the payout and removing the yield-trap risk. | →Stable |
| CounterA rich dividend yield may continue to attract income-oriented buyers regardless of the FCF shortfall, especially if payout is maintained — the market can sustain a stretched yield longer than the fundamental concern implies if sentiment remains supportive. | ||
The stock is pulling back with the RSI at 35 — approaching oversold territory — while price remains above the 200-day moving average and on-balance volume continues to rise, suggesting this dip may represent a buying opportunity within a longer uptrend rather than the start of a reversal.
→StableMomentum breakdown
- Expectation
- Price recovers toward the $65 resistance level within two quarters as the RSI mean-reverts above 50 without violating the 200-day moving average.
CounterA declining RSI to 35 alongside mixed MACD signals may indicate selling pressure is still building; a break below the 200-day moving average would invalidate the uptrend argument and shift the technical picture to neutral or negative.
Operating and net margins are strong at roughly 30%, the Piotroski financial-strength score reaches 7 out of 9, and the company has beaten earnings estimates in three of the last four quarters — a track record that supports the view of a financially resilient franchise capable of sustaining its income stream.
→StableQuality breakdown
- Expectation
- Margins hold above 25% and earnings beats continue in at least 3 of the next 4 quarters, reinforcing the consistency argument and supporting the current multiple.
CounterStrong margins and balance-sheet health do not compensate for a revenue base that is barely growing — any margin compression on a flat top line quickly turns the earnings picture negative and removes the primary quality argument.
Revenue growth is near-stagnant — the growth dimension scores among the weakest in the overall profile — leaving little room for earnings expansion if margins face any pressure and creating a ceiling on the multiple the market is likely to assign.
→StableGrowth breakdown
- Expectation
- This pillar is falsified if revenue growth re-accelerates to a sustained rate above 5% year-over-year for 2 consecutive quarters, meaningfully upgrading the growth profile.
CounterMature consumer-defensive franchises often command stable multiples precisely because of predictability; stagnant revenue may already be fully priced in and does not necessarily act as a fresh de-rating catalyst.
Free cash flow covers only 39% of net income — a significant gap flagged as a red flag — raising questions about whether reported earnings translate into the cash needed to sustain the dividend, with the yield already noted as a potential trap.
→StableCatalyst breakdown
- Expectation
- Free cash flow as a percentage of net income recovers above 70% over the next four quarters, providing a firmer foundation for the payout and removing the yield-trap risk.
CounterA rich dividend yield may continue to attract income-oriented buyers regardless of the FCF shortfall, especially if payout is maintained — the market can sustain a stretched yield longer than the fundamental concern implies if sentiment remains supportive.
Per-dimension breakdown
Quality
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.3 |
| ROA | 3.6 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 3.5 |
| FCF quality | 3.1 |
| Moat | 6.5 |
| Rule of 40 | 3.0 |
| Piotroski F | 7.8 |
- ▸Strong margins: 30%
- ▸Earnings quality RED FLAG: 39% FCF/NI
- ▸Rule of 40: 12 (fail)
- ▸Strong Piotroski F-Score: 7/9
Growth
2.5/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 2.5 |
Momentum
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 7.3 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.3 |
| Price target | 6.3 |
| erm sentiment | 4.4 |
- ▸Light analyst coverage (5.0) — signal dampened
Insider
5.0/10data confidence 50%Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.8 |
| quality rank | 5.8 |
| growth rank | 0.0 |
- ▸Attractive P/E vs peers
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 2.9 |
| 52w position | 8.5 |
Risk (lower is worse)
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.9 |
| days to cover | 10.0 |
| volatility | 7.0 |
| put call | 10.0 |
| implied vol | 6.4 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 6.6 |
- ▸Above max pain $35
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 4.2 |
- ▸Strong earnings: 3B/0M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.3>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:35d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.8=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.77
Upside
-5.4%
Downside
7.1%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 68, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.8=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.77 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.9, Catalyst at 6.8, and Value at 6.6; the weakest are Growth at 2.5, Peer rank at 4.2, and Technical at 4.5. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.77 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Operating and net margins are strong at roughly 30%, the Piotroski financial-strength score reaches 7 out of 9, and the company has beaten earnings estimates in three of the last four quarters — a track record that supports the view of a financially resilient franchise capable of sustaining its income stream.
Trip ifOperating margin compresses below 25% for 2 consecutive quarters.
- P2The stock is pulling back with the RSI at 35 — approaching oversold territory — while price remains above the 200-day moving average and on-balance volume continues to rise, suggesting this dip may represent a buying opportunity within a longer uptrend rather than the start of a reversal.
Trip ifPrice closes below the 200-day moving average for more than 10 consecutive trading days.
- P3Revenue growth is near-stagnant — the growth dimension scores among the weakest in the overall profile — leaving little room for earnings expansion if margins face any pressure and creating a ceiling on the multiple the market is likely to assign.
Trip ifRevenue growth exceeds 5% YoY for 2 consecutive quarters.
- P4Free cash flow covers only 39% of net income — a significant gap flagged as a red flag — raising questions about whether reported earnings translate into the cash needed to sustain the dividend, with the yield already noted as a potential trap.
Trip ifFree cash flow as a percentage of net income rises above 70% for 2 consecutive quarters.