Following the potential illegal marketing of e-cigarette products that the U.S. Food and Drug Administration is investigating, the major tobacco stocks are more affordable today than a they were a few days ago.
These tobacco giants are now beating the 20-Year High-Quality Market (HQM) Corporate Bond and the S&P 500 index in terms of a higher yield. The spot rate on the 20-Year HQM Corporate Bond is 4.4% while the dividend yield on the S&P 500 index is around 1.9%.
British American Tobacco PLC ADR (BTI, Financial) closed at $43.27 on Friday, for a forward dividend yield of 6.28% versus an industry median of 5. The stock fell 35% so far this year and has a market capitalization of about $99.25 billion. The price-book ratio is 1.2 versus an industry median of 3.78 and a price-sales ratio of 3.31 compared to an industry median of 2.66.
The 52-week range is $42.81 to $71.44. The chart of Peter Lynch is suggesting that the stock is cheap.
The recommendation rating is 1 out of 5 and the average target price is $65.5 per share.
The share price of Altria Group Inc. (MO, Financial) was $60.06 at close Oct. 12 for a forward dividend yield of 5.33% versus an industry median of 5. The share price has declined 15% so far this year and the market capitalization is about $116 billion. The price-book ratio is 7.19 versus an industry median of 3.78 and the price-sales ratio is 4.54 versus an industry median of 2.66.
The 52-week range is $53.91 to $74.38. The Peter Lynch chart shows that the share price is below the earnings line (P/E = 15).
The recommendation rating is 2.2 out of 5 and the average target price is $67.52 per share.
Imperial Brands Plc (IMBBY, Financial)'s closing price was $33.10 per share on Oct. 12, making a forward dividend yield of 4.65% versus an industry median of 5. The market capitalization is about $32.11 billion, the price-book ratio is 5.05 versus an industry median of 3.78 and the price-sales ratio is 0.81 versus an industry median of 2.66. The 52-week range is $32.61 to $44.02.
Despite the interesting forward dividend yield, the share price may not be compelling. The share price is above the Peter Lynch Earnings Line (P/E =15) as illustrated by the below chart powered by GuruFocus.
The average target price is $66 per share.
Japan Tobacco Inc. (JAPAY, Financial) closed at $12.68 on Oct. 12, granting a forward dividend yield of 5.31% versus an industry median of 5. The stock fell 21% so far this year and has a market capitalization of about $45.98 billion. The price-book ratio is 1.93 versus an industry median of 3.78 and a price-sales ratio of 2.39 compared to an industry median of 2.66.
The 52-week range is $12.63 to $17.39. The stock appears cheap according to the Peter Lynch chart.
The recommendation rating is 1 out of 5 and the average target price is $17.86 per share.
Philip Morris International Inc. (PM, Financial) closed at $82.31 per share on Oct. 12 for a forward dividend yield of 5.54% versus an industry median of 5. The market capitalization is about $131 billion. The price-sales ratio is 4.28 versus an industry median of 2.66. The 52-week range is $76.21 to $114.40.
According to the below Peter Lynch chart, the stock may not be cheap.
The recommendation rating is 2.3 out of 5, and the average target price is $91.69 per share.
Disclosure: I have no positions in any security mentioned in this article.
