British American TobaccoFRA:BMTA +2.97%71 Operating Margin % is 48.67% as of Dec. 2025, which is 12% above its 10-year median of 43.32. GuruFocus rates FRA:BMTA with a GF Score™ of 71/100 and a GF Value™ of €31.65 (Significantly Overvalued). The stock has 6 warning signs investors should review. Among 48 Tobacco Products companies, British American Tobacco ranks better than 95.83% on this metric.
British American Tobacco (FRA:BMTA) Operating Margin % Explanation
Just like Gross Margin %, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.
Be Aware
Operating Margin % can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).
If a company is facing competition, its Operating Margin % may decline. Often the Operating Margin % declines well before the company's Revenue or even profit decline. Therefore, Operating Margin % is a very important indicator of whether the company is facing problems.
For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokias Operating Margin % had already been in decline since 2002, although its Earnings per Share (Diluted) were still rising. Investors who paid attention to Operating Margin % would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).
Therefore, Operating Margin % is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.
British American Tobacco Operating Margin % Related Terms
British American Tobacco Operating Margin % Historical Data
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
FRA:BMTA vs PM, MO, TPB: Operating Margin % Comparison
For the Tobacco subindustry, British American Tobacco's Operating Margin %, along with its competitors' market caps and Operating Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
British American Tobacco Operating Margin % vs Tobacco Products Industry
For the Tobacco Products industry and Consumer Defensive sector, British American Tobacco's Operating Margin % distribution charts can be found below:
* The bar in red indicates where British American Tobacco's Operating Margin % falls into.
British American Tobacco Operating Margin % Calculation
Operating Margin % - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.
British American Tobacco's Operating Margin % for the fiscal year that ended in Dec. 2025 is calculated as
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
British American Tobacco (FRA:BMTA) has a Operating Margin % of 48.67% as of Dec. 2025. Operating margin is the ratio of total operating income to net sales. View historical data on British American Tobacco and its competitors. This is 12% above median its historical median of 43.32. According to the industry distribution chart, British American Tobacco ranks #2 out of 48 companies in the Tobacco Products industry, placing it in the top 4.2%.
Is British American Tobacco's Operating Margin % too high?
British American Tobacco's current Operating Margin % of 48.67% is 12% above median its 10-year median of 43.32. The Tobacco Products industry median Operating Margin % is 9.37. British American Tobacco's value of 48.67% is 419.7% above this industry median. Based on the distribution chart, British American Tobacco ranks #2 out of 48 companies in the Tobacco Products industry, which is in the top quartile — a strong position relative to peers. Overall, British American Tobacco has a GF Score™ of 71/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does British American Tobacco's Operating Margin % compare to PM and MO?
According to the Tobacco Products industry distribution chart, British American Tobacco ranks #2 out of 48 companies for Operating Margin %. This places British American Tobacco in the top 4% of its industry — outperforming the majority of peers. The industry median Operating Margin % is 9.37. British American Tobacco's value of 48.67% is 419.7% above this benchmark. While the company's 10-year median is 43.32 vs. the industry median of 9.37, British American Tobacco has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Operating Margin % for a Tobacco Products company?
The median Operating Margin % among Tobacco Products companies is 9.37, based on 48 companies in the industry. Companies in the top quartile (top 25%) have a Operating Margin % significantly above this median, while those in the bottom quartile fall well below. However, Operating Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. British American Tobacco's current Operating Margin % of 48.67% is 419.7% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Operating Margin % mean?
A high Operating Margin % can signal that a stock is expensive relative to its fundamentals. Operating margin is the ratio of total operating income to net sales. View historical data on British American Tobacco and its competitors. For the Tobacco Products industry, the median Operating Margin % is 9.37 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. British American Tobacco's current Operating Margin % is 48.67%, which is 12% above median its own 10-year median of 43.32. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is British American Tobacco stock overvalued right now?
Based on GuruFocus' analysis, British American Tobacco (FRA:BMTA) is currently considered Significantly Overvalued. The stock's GF Value™ is €31.65, compared to a current price of €52.00 — trading 64.3% above its estimated fair value. The current Operating Margin % is 48.67%, which is 12% above median its 10-year median of 43.32 and 419.7% above the Tobacco Products industry median of 9.37. British American Tobacco's overall GF Score™ is 71/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Operating Margin % calculated?
Operating Margin % is calculated from a company's financial statements. For British American Tobacco (FRA:BMTA), the current Operating Margin % is 48.67% as of Dec. 2025. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is British American Tobacco (FRA:BMTA) Overvalued in 2026?
Based on GuruFocus' analysis, British American Tobacco stock appears to be overvalued.
The current stock price of €52.00 is trading 64.3% above its estimated GF Value™ of €31.65.
GuruFocus considers British American Tobacco to be Significantly Overvalued.
Key valuation signals for FRA:BMTA:
Operating Margin %: 48.67% (12% above median its 10-year median of 43.32)
GF Value™: €31.65 vs. price of €52.00 (64.3% above fair value)
Industry Position: 419.7% above the Tobacco Products median (#2 of 48)
No single metric tells the full story. See the FRA:BMTA stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
The third-largest tobacco company by volume, British American Tobacco sold 465 billion cigarettes in 2025. Its leading brands are Dunhill, Kent, Pall Mall, Lucky Strike, and Rothmans in cigarettes. Its ownership of the Camel, Natural American Spirit, and Newport brands are limited to the US. In next-generation products, the company has the Vuse brand in vaping, Glo in heated tobacco, and Velo in modern oral tobacco. The company also owns a 22.9% stake in ITC limited, the largest Indian cigarette company.
71GF Score
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