While British American Tobacco (Malaysia) Berhad (KLSE:BAT) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the KLSE over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine British American Tobacco (Malaysia) Berhad’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for British American Tobacco (Malaysia) Berhad
What's the opportunity in British American Tobacco (Malaysia) Berhad?
Good news, investors! British American Tobacco (Malaysia) Berhad is still a bargain right now. My valuation model shows that the intrinsic value for the stock is MYR18.40, but it is currently trading at RM14.66 on the share market, meaning that there is still an opportunity to buy now. British American Tobacco (Malaysia) Berhad’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from British American Tobacco (Malaysia) Berhad?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 21% over the next couple of years, the future seems bright for British American Tobacco (Malaysia) Berhad. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since BAT is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on BAT for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BAT. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
If you want to dive deeper into British American Tobacco (Malaysia) Berhad, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for British American Tobacco (Malaysia) Berhad you should be mindful of and 1 of them can't be ignored.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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