- Price
- $37.48
- Fair value
- $45.00
- Discount
- 16.7%
- Uncertainty
- Medium
- LSEG rating
- 1.00
- Moat
- Wide
- Next earnings
- 2026-11-17
- Next earnings is estimate
- No
- Company name
- Imperial Brands
- Sector
- Tobacco
- About
- Imperial Brands is a UK tobacco company. Most of its profit comes from cigarettes and other combustible tobacco, and it sells in its largest markets, which include the US and Germany, and in many other countries. It also sells next generation products (NGP): heated tobacco (Pulze and iD sticks), vapes (blu) and modern oral nicotine products (Zone, Skruf and, since May 2026, Black Buffalo). It makes money from the price of its products after excise duty, and it raises prices each year to offset falling cigarette volumes. Its Distribution segment, Logista, distributes tobacco and other products and runs long-distance transport. Its fiscal year ends on September 30. Imperial uses most of its free cash flow, more than £2.2 billion in fiscal 2026, for dividends and share buybacks. In the US, the shares trade as an ADR under the ticker IMBBY.
- Thesis
- Imperial Brands trades at a discount because investors see a business that shrinks in volume and depends on price increases. Cigarette volumes fall each year, and in the first half of fiscal 2026 tobacco net revenue grew only 1.5%, from higher prices. Its aggregate market share in its priority markets fell, because it chose more profitable segments over volume. Its next generation products still lost money, £40 million of adjusted operating loss in the first half of fiscal 2026, and its US NGP net revenue fell because of heightened promotional activity in the market. The group also paid R J Reynolds after a Delaware Supreme Court decision in December 2025, and the conflict in the Middle East added uncertainty. For the gap to close, Imperial must deliver its fiscal 2026 guidance of 3% to 5% growth in adjusted operating profit and high-single-digit growth in adjusted EPS, keep free cash flow above £2.2 billion, and show that NGP grows toward profit while combustible pricing holds. The first test is the full-year fiscal 2026 results on November 17, 2026, which also give the fiscal 2027 outlook. The £1.5 billion buyback for fiscal 2027, planned to end by October 29, 2027, supports EPS growth. Investors often keep a discount on tobacco companies because of the long-term fall in smoking, so the gap probably closes slowly, over several years of steady results. The main risk is a faster fall in cigarette volumes or a price war in its large markets.
- Risks
- Cigarette volumes fall each year. Imperial needs price increases to grow revenue, and its aggregate market share in its priority markets fell in the first half of fiscal 2026. If smokers trade down to cheaper brands or quit faster, revenue and profit can fall.
Next generation products still lose money, with an adjusted operating loss of £40 million in the first half of fiscal 2026. In the US, heightened promotional activity lowered NGP net revenue in the first half of fiscal 2026. If NGP does not reach scale, it uses cash without adding profit.
Governments tax and regulate tobacco and nicotine products. Higher excise taxes, flavour bans or new rules on vapes and nicotine pouches can lower volumes or raise costs. US and Australian tariffs also affected tobacco profit in the first half of fiscal 2026.
Adjusted net debt was £10.5 billion at March 31, 2026, about 2.4 times EBITDA. The buyback and the progressive dividend leave little room if profit falls, and a stronger pound lowers the value of foreign profit.
Legal claims can bring large payments. After the Delaware Supreme Court decision in December 2025, Imperial must pay R J Reynolds a further $234 million over three years.
- Balance sheet
- At March 31, 2026, reported net debt was £10.9 billion, and adjusted net debt was £10.5 billion, about 2.4 times adjusted EBITDA on a 12-month basis, flat with a year earlier. Imperial targets net debt of 2.0 to 2.5 times EBITDA and said on October 8, 2026 that leverage for fiscal 2026 will stay at the lower end of this range. In the 12 months to March 31, 2026, free cash flow was £2.6 billion, with cash conversion of about 98%. Imperial uses this cash for its progressive dividend (83.36 pence interim dividend in fiscal 2026) and its evergreen share buyback (£1.45 billion in fiscal 2026 and £1.5 billion planned for fiscal 2027). Since the buyback started in October 2022, issued share capital fell by more than 21%. The figures will be updated with the full-year results on November 17, 2026.
As of 2026-03-31.
- Checkpoints
- Nov 17, 2026: Fiscal 2026 results and fiscal 2027 outlook. Pending. Watch: Adjusted operating profit growth of 3% to 5%, high-single-digit EPS growth, free cash flow above £2.2 billion and a fiscal 2027 outlook with similar growth pass; results below guidance or a weaker outlook fail.
May 2027 (estimate): First-half fiscal 2027 results: NGP and US performance. Pending. Watch: NGP revenue growth with a smaller adjusted loss and stable US tobacco profit pass; a larger NGP loss or a fall in US profit fails.
Oct 29, 2027: Completion of the £1.5 billion fiscal 2027 buyback. Pending. Watch: The buyback completes on plan with leverage at the lower end of 2.0 to 2.5 times passes; a pause in the buyback or higher leverage fails.
- Recent events
- 2026-10-08: In its pre-close trading update, Imperial said that fiscal 2026 adjusted operating profit growth will be within its 3% to 5% guidance, with high-single-digit EPS growth and more than £2.2 billion of free cash flow, all at constant currency. Tobacco net revenue is expected to grow at a low-single-digit rate, and NGP net revenue at a double-digit rate. Imperial completed its £1.45 billion buyback for fiscal 2026 and announced a £1.5 billion buyback for fiscal 2027, with a first tranche of up to £750 million. It also said that it acquired Helwit, a modern oral business in Sweden.
2026-05-27: Imperial bought Black Buffalo, a US maker of tobacco-free alternatives to moist smokeless tobacco, for an initial $150 million, plus a deferred sum based on performance over three years.
2026-05-12: Imperial reported first-half fiscal 2026 results. Tobacco net revenue grew 1.5%, and NGP net revenue grew 7.5%, both at constant currency. Adjusted operating profit rose 0.6% to £1,644 million, and adjusted EPS rose 5.3% to 127.7 pence. Reported operating profit fell 36.5% because of the Delaware settlement and the costs of its 2030 strategy. The interim dividend rose 4.0% to 83.36 pence.
2026-04-14: In a trading update, Imperial kept its fiscal 2026 guidance but said that first-half adjusted operating profit will be only slightly higher than a year earlier, with growth weighted to the second half. It said that US NGP net revenue will fall because of heavy promotions, and that the conflict in the Middle East makes the second half more uncertain. It paid $200 million to R J Reynolds after the Delaware Supreme Court decision of December 2025, with $234 million more to pay over three years.