 Welcome to the channel. This is reliable Rudy in this video. We're going to touch base on a Couple of the financials. I want to tweak some of the stuff that I had said in the previous video and just kind of get a Further point across on that We're also going to go into the difference between profit margins free cash margins and for BTI in particular in the next video For the valuation. I'm going to be using different profit margins and free cash flow margin I'll go over that later on this video We're going to touch base on BTI's 2022 guidance and also some of the analyst projections for the company since I was not able to find any financial data for 2022 we're going to kind of get a a feel for what we could potentially expect moving forward before we put in any numbers for our stock analyzer tool. I also Wanted the state that VT does not have a holding bank the institution Vanguard group does not have a Holding in BTI therefore. I do not hold this in my VT or VX us index So that puts me to my further point. I'm not a financial advisor everything this video contains only my opinion as for entertainment purposes only I have no individual holding and The company or in my index funds Just simply stating my opinion nothing more nothing less. I'm not trying to persuade you guys in either direction just stating my opinion Okay, so getting into this video What are we going to focus on I want to touch base on the return on invest capital the shares the debt and Also the five-year average profit margins the disconnect right here We're going to touch base on that one last time just to get my point further across So starting with the five-year return on invest capital We're going to go to ROI see dot AI right here. I have BTI pulled up here is their ROI see dating back from 2006 we're going to move right along in line from 2006 we put up 17 17 15 16 17 18 23 24 21 21 18 31 31% in the acquisition year of 2017 now they showed me from 2006 moving forward that they are more than capable of Posting a return on invest capital that is quite attractive. This is very impressive track rate our track record right here and Yeah, I'm moving forward. Do I expect them to be around this low six percent return on invest capital? I'll leave that up to you guys to the side But if we look post acquisition on our return of invest capital five point six percent five point eight Six point four and six point six so consistently getting a larger return on invest capital Moving forward for a ten-year analysis. We go to the stock analyzer tool. This is a ten-year analysis Do I think they're going to Be around this six percent return on invest capital or are they going to increase that consistently going forward? From 2006 to 2016 they consistently increase their return on invest capital and at a solid rate So touching base to the eight pillars at first glance. It doesn't look that great But in the past they've showed me that they can get a solid return on invest capital I do like that. Do I look at this as a red check mark or a green check mark? I'll leave that up to you guys to the side next. We're going to go over the profit margin net profit margin from 2006 19 21 20 19 19 20 25 23 headset went out right there 32 31 now in 2017 acquisition year a hundred and eighty five percent now This is the five-year average profit margin one two three four five the last five years 2017 is included in that 185 percent now looking at this am I going to be using 51%? No, no my job is to To look at the information determine where do I think their profit margins are going to be moving forward now following that? 185% we put up 25 22 24.8 and 26.5, but let's not forget 2021 is a strange year all-time low interest rates in the United States Stimulus checks a lot of people had money to spend you got to keep that in mind, but nonetheless They are increasing their profit margins year to date over the last three years I do like that moving forward. Do I think this is going to be up or down post acquisition? This is the profit margin as they put up. I do like the look of that Now next thing I want to point out is you disconnect between profit margin and free cash flow margin So from up here, we are now reading right to left from 2013 to 2021 free cash flow margin 14 16 39 30 26 now that 26 percent free cash flow margin is 2017 so moving forward 45 39 42 35 Doesn't make sense To use different profit margins in different free cash flow margin. Yes now price to earnings is Based off a profit margin price to free cash flow is based off a free cash flow margin I'm going to be using the lower price of free cash flow numbers, and I am price to earnings numbers I hope that makes sense if it doesn't leave something in the comments And I can reach out to you about that So very interesting stuff right there is a little bit different from my recent valuations and other companies Next thing I want to talk about these shares outstanding because in their forward guidance they talk about the shares outstanding So going back to return on best capital or Common shares outstanding from 2006 to 2017 Consistently buying back shares. I'm not going to state them all out consistently buying back shares 2017 acquisition year they issued shares and issued another set of shares the following year now They've consistently been around this 2.28 billion Are they going to be buying back shares or issuing shares going forward over my next 10 years? That is my analysis time frame From 2006 to 2016 consistently buying back shares keep that in mind Last thing I want to go over in the financial statements is the capital expenditures net change in capital expenditures from 2012 moving forward They've consistently lowered their capital expenditures 2017 the acquisition year they increase their capital expenditures now They are back on track decreasing their capital expenditures They are opening up more cash by not increasing their capital expenditures so that they are able to pay off some of their longer term debt and Well, just reiterating the long-term debt right here. Here's a 2017 year big spike Consistently been buying our paying off debt if we go back to the cash flow statement down here You can see here is the debt payments that they've made since 2017 now. They are also issuing debt I did not state that in my last video. They're still issuing debt But paying off debt same with they are repurchasing capital stock But they are also issuing capital stock at the same time you can see in 2017 We already know they issued shares, but they are also buying back shares at the same time This is where you find this is a part of their return on invested capital So keep that in mind moving forward now getting into some of these other articles we're going to focus on the British American tobacco backs 2022 guidance update Now they announce this on June 9th of 2022 now. I'm sure this is guys part of the board of directors I'm sure something to do with the company, but it was posted by James first. Maybe he's just Stating the article has nothing to do with the company. I don't know but nonetheless they back their 2022 guidance Now what is their guidance? Bridge tobacco Thursday reiterates 2022 guidance revenue and earnings growth revenue growth Maintain full-year constant currency guidance of revenue growth at 2 to 4 percent for 2022 Keep that in mind mid the single-digit adjusted earnings per share growth and They reiterate in the tailwinds of 2021 2% Tough comparable sales from 2021. I'll show you that later on in this article But that's for the first half and full year at 5% growth Keep that in mind next chief executive Jack bulls says the company is highly cash Generative and is on track to return 2 billion pounds or 2.51 billion USD to shareholders through its 2022 share buy back program going back to the shares 2.2 billion Now they are buying all those back through 2022 are they also going to be issuing shares? So it's going to be interesting when they've released their 22 and from financial information how many shares they buy back Subtract in the amount that they're also going to issue at the same time because they've showed us that they're going to buy back shares But also issue shares So keep that in mind not all of that share buyback is going to be direct correlation to the shares Outstanding there is going to be issuances along with that as well Okay, got that point across Next however first half group so with the BTI they report their Financial data in terms of groups first half is representing the first half the year second half is Representing the second half the year makes sense right first half group results will reflect a strong prior year Comparator in the United States Why is it that they say the United States? All-time low interest rates People had money to spend with stimulus checks in 2021 in the United States Hmm, how interesting does it make sense that they're going to have a strong prior year comparator Comparable sales. Yes, it does but they are still backing their two to four percent growth now moving from 2022 to 2023 What are those numbers going to look like? Keep that in mind when we're doing our analysis is important to understand these things So that is everything I wanted to state right there Now we're going to go to analysts estimates for the company Now here, I'm not going to go through everything right here But nonetheless here is their income statement evaluation on annual data now These are the analyst projections moving forward now We know the company has stated that Their revenue growth moving forward is going to be two to four percent for the year of 2022 They came out and reiterated that statement. They didn't decrease. They didn't increase two to four percent Now I already know the calculation, but I'll pull it up anyways This is the growth 2021 to 2022 they were estimating 8.2% growth, but the company is saying two to four percent Watch out analysts are not going to be perfect They are more than likely going to be on the higher side lower side. I don't know it all it all depends but Am I going to take what the analysts are saying or what the company is saying in more regard? Keep that in mind now the following year 2022 to 2023 Here is the second projection right there They're expecting 4.8% growth now the next year from 2023 to 2024 They're expecting 4.3% growth Okay, now they're stating that they're going to have revenue growth in 2022 of two to four percent That's what the company said two to four percent right there, but 2021 tough comparable sales in the United States analysts are expecting higher growth in 2022 and less growth in 2023 But nonetheless we're going to move on you can also see in the box. So the box is popping up right here So when I hover over this you can see net income our net margins 25% is what they're expected for 2022 2023 they're expected 28% and 2024 they're expected 29% increase. They're projected by analysts increasing net margins Now if we go back to return on invested capital, we can see that their net margins over the last three years have increased Well, 2021 the United States tough comparable sales. They are anticipating some pullback. How much pullback are we going to get? That is for that is for us to decide moving forward, but 2023 and moving forward They're expected 28 and 29% so we are still getting that growth Look at this pullback from 2018 and 2019 minus two percent back on track back on track Okay, 2022 would be reasonable to assume a little bit of a decrease But are they going to get back on track following that and moving forward? I'll leave that up to you guys this side So next I want to go over the net income net income in 2022. They're expected 6.9 billion the next year 8.2 billion the next year 8.7 billion they're expected net income growth I do like that. What else do we want to go over right here real quick? That's the quarterly Now the bounce sheet This is basically showing the debt EBITDA is a um Is the earnings before interest taxes depreciation and amortization you can use EV which is enterprise value divided by EBITDA to determine the debt levels of the company They are expecting their debt levels to continue decreasing So if we go back to return on the best capital we look at the wrong term debt They are paying off debt, but they are issuing debt at the same time. Well, let's remember in 2022 We've had quite a few rate hikes Now I don't know how that compares over in Britain and Britain But if they are also increasing their rates then they are they in a comfortable position in terms of their debt They are increasing their net income increasing cash flow increasing profitability Are they going to be in a comfortable position in terms of debt? Are they going to be continuing paying off debt now? It's taken into consideration. They're upping their share buybacks. They have 2.x amount billion 2.5 billion and share repurchases for 2022 Now and from 2018 to 2021 they weren't buying back shares But now as they're paying off more and more debt they are in a more comfortable position to be able to buy back shares So keep that in mind The last thing on this. I thought they had something about the dividends Divisions per share. I thought they did but nonetheless, I thought we had some really good information moving forward Yeah, we're gonna see what type of numbers that we're going to project for the stock analyzer tool moving forward We are at 15 minutes a little bit longer than I wanted to be but I felt we got some really good information off in this video And yeah, um, if you guys like the video makes you drop a like Subscribe to the channel and we will see you on the next video for the stock analyzer tool