We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
British American (BTI) 2018 Earnings: Pricing a Key Catalyst
Read MoreHide Full Article
British American Tobacco p.l.c. (BTI - Free Report) is slated to release preliminary results for 2018 on Feb 28. The company’s performance is gaining from robust pricing initiatives and volume growth across segments. Let’s take a closer look at the aspects that are likely to impact the upcoming results.
Factors Likely to Aid
British American has been witnessing revenue growth for a while now, courtesy of strong pricing initiatives. In fact, well-chalked pricing efforts are boosting revenues across the combustibles and potentially reduced risk products (PRRPs) categories. We note that for the six-months period ended Jun 30, 2018, the company witnessed an 8.5% rise in revenues owing to strategic pricing and strong brand performances. Going ahead, we expect pricing to be a key revenue driver for the company.
Speaking of brands, British American’s strong portfolio of cigarettes as well as PRRPs is well-positioned to drive global performance. Markedly, the company’s Global Drive Brands, consisting of banners like Dunhill, Kent and Lucky Strike, are performing well.
Also, the Next Generation Products (NGP) and Tobacco Heating Products (THP), which are included in the PRRPs segment, are performing well on consumers’ rising health consciousness and awareness regarding the harmful impacts of nicotine. Notably, revenues in the PRRPs unit surged 43.4% (on a representative basis) in the first six months of 2018, backed by substantial growth witnessed in the NGP portfolio as well as the company’s vapor products. Further, management is on track with innovation in this category. Such efforts as well as consumers’ growing enthusiasm toward low-risk tobacco alternatives are likely to drive the upcoming results.
Apart from these, British American is gaining from the acquisition of Reynolds American Inc. In fact, the buyout contributed significantly to revenues and profitability in the six-months period ended Jun 30. Further, the buyout is a key catalyst in augmenting Oral tobacco volumes.
Headwinds
Although the aforementioned factors are encouraging, there are certain headwinds in British American’s path that may drag the company’s performance. In this context, we note that foreign exchange rates are a worry. Markedly, foreign currency headwinds weighed on the company’s performance during the first six months of 2018 by nearly 8%. Management anticipates currency fluctuation to negatively impact revenues by nearly 5-6% in 2018.
Additionally, the company is witnessing declining cigarette sales volumes in the United States, mainly due to industry trade inventory declines. For 2018, cigarette industry volumes are expected to remain dismal, which is likely to dent performance. Certain other market regions of the company are exposed to sales volume volatility. Notably, lower sales volumes in the Gulf Cooperation Council (GCC), Brazil and Russia during the first six months of 2018 were a headwind. We note that performance of the GCC region has been dismal due to adverse trade inventory movements.
Nevertheless, we expect that the company’s robust pricing endeavors and growth in PRRPs will cushion the hurdles.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that they have the right combination of elements to beat estimates.
Ollie's Bargain Outlet Holdings, Inc (OLLI - Free Report) has an Earnings ESP of +1.43% and a Zacks Rank #2.
Nu Skin Enterprises, Inc. (NUS - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank #2.
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
Image: Bigstock
British American (BTI) 2018 Earnings: Pricing a Key Catalyst
British American Tobacco p.l.c. (BTI - Free Report) is slated to release preliminary results for 2018 on Feb 28. The company’s performance is gaining from robust pricing initiatives and volume growth across segments. Let’s take a closer look at the aspects that are likely to impact the upcoming results.
Factors Likely to Aid
British American has been witnessing revenue growth for a while now, courtesy of strong pricing initiatives. In fact, well-chalked pricing efforts are boosting revenues across the combustibles and potentially reduced risk products (PRRPs) categories. We note that for the six-months period ended Jun 30, 2018, the company witnessed an 8.5% rise in revenues owing to strategic pricing and strong brand performances. Going ahead, we expect pricing to be a key revenue driver for the company.
Speaking of brands, British American’s strong portfolio of cigarettes as well as PRRPs is well-positioned to drive global performance. Markedly, the company’s Global Drive Brands, consisting of banners like Dunhill, Kent and Lucky Strike, are performing well.
Also, the Next Generation Products (NGP) and Tobacco Heating Products (THP), which are included in the PRRPs segment, are performing well on consumers’ rising health consciousness and awareness regarding the harmful impacts of nicotine. Notably, revenues in the PRRPs unit surged 43.4% (on a representative basis) in the first six months of 2018, backed by substantial growth witnessed in the NGP portfolio as well as the company’s vapor products. Further, management is on track with innovation in this category. Such efforts as well as consumers’ growing enthusiasm toward low-risk tobacco alternatives are likely to drive the upcoming results.
Apart from these, British American is gaining from the acquisition of Reynolds American Inc. In fact, the buyout contributed significantly to revenues and profitability in the six-months period ended Jun 30. Further, the buyout is a key catalyst in augmenting Oral tobacco volumes.
Headwinds
Although the aforementioned factors are encouraging, there are certain headwinds in British American’s path that may drag the company’s performance. In this context, we note that foreign exchange rates are a worry. Markedly, foreign currency headwinds weighed on the company’s performance during the first six months of 2018 by nearly 8%. Management anticipates currency fluctuation to negatively impact revenues by nearly 5-6% in 2018.
Additionally, the company is witnessing declining cigarette sales volumes in the United States, mainly due to industry trade inventory declines. For 2018, cigarette industry volumes are expected to remain dismal, which is likely to dent performance. Certain other market regions of the company are exposed to sales volume volatility. Notably, lower sales volumes in the Gulf Cooperation Council (GCC), Brazil and Russia during the first six months of 2018 were a headwind. We note that performance of the GCC region has been dismal due to adverse trade inventory movements.
Nevertheless, we expect that the company’s robust pricing endeavors and growth in PRRPs will cushion the hurdles.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that they have the right combination of elements to beat estimates.
Turning Point Brands, Inc (TPB - Free Report) has Earnings ESP of +11.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ollie's Bargain Outlet Holdings, Inc (OLLI - Free Report) has an Earnings ESP of +1.43% and a Zacks Rank #2.
Nu Skin Enterprises, Inc. (NUS - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank #2.
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
Click to get it free >>