Imperial Brands PLC
🇬🇧 IMB.LSE · London · GB0004544929
Consumer
GBX 3077.00 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
12.3
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 3077.00 ÷ 249.34 = 12.3
TTM period through: 2025-09-30
Forward P/E (estimated): 8.2
Based on analyst estimates
Reference: Provider P/E (Trailing): 12.4
Yield (Fwd)
5.20%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 5.27%
Net Debt/EBITDA (TTM)
2.0x
Latest quarter: 3.6x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2025-09-30
Latest quarter (2025-09-30): 3.6x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
64.2%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 75.2%
Cash Flow Payout (TTM): 48.0%
FCF Coverage (TTM): 1.84x
ROE
38.7%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
7.4x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
Imperial Brands is a highly cash-generative global consumer staples company with immense pricing power and a disciplined capital allocation policy. Trading at 3,077 GBX, the stock is positioned below our blended fair value estimate of 3,500-3,800 GBX, representing a 13-23% upside to fair value. The proposed 14.7% dividend reduction is a prudent strategic reallocation alongside its massive £1.45bn buyback and remains fully supported by robust free cash flow coverage, making it worth considering for new positions at current levels.
Sector Context
Imperial Brands operates in the tobacco and next-generation products (NGP) industry, manufacturing and distributing cigarettes, fine-cut tobacco, and vaping products globally. For dividend investors, tobacco acts as a classic defensive consumer staple, characterized by high pricing power, low capital intensity, and massive free cash flow generation that supports consistent shareholder returns despite structural industry volume declines.
Temporary Opportunity Identified
Market hesitation due to the proposed 14.7% dividend reduction, restructuring announcements, and the upcoming CEO transition, which temporarily obscure the company's massive cash generation and ongoing £1.45bn buyback yield.
📊 Strategy Analysis
- • Trading at an attractive P/E of 12.34 (well within the ideal 8-15x range) and offering a 5.27% yield, presenting a compelling entry point relative to historical averages.
- • Exceptional free cash flow generation of 3.29B (Cash Flow Payout ratio of just 48.04%) provides immense coverage for both the dividend and the ongoing £1.45 billion share buyback program.
- • The proposed 14.7% dividend reset is a prudent strategic capital reallocation rather than a sign of distress, as the post-cut dividend remains exceptionally well-covered by free cash flow (1.84x coverage).
- • Net Debt/EBITDA of 1.96x is very safe and demonstrates a conservative balance sheet capable of navigating industry transitions.
⚠ What to Watch
- • The historical 5-year EPS CAGR of -3.6% highlights the ongoing structural volume declines in the legacy combustible tobacco industry.
- • The upcoming CEO transition in October 2026 and recent plant closures (Reemtsma) introduce mild execution and restructuring risk during the company's shift toward Next-Generation Products (NGPs).
- • While mathematically well-covered, the proposed 14.7% dividend reduction for 2026 requires monitoring to ensure retained capital is efficiently deployed into growth initiatives.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-04-04
Disclaimer: This information is for educational purposes only. Not financial advice.