British American Tobacco (BTI -7.32%) stock got hit with a big sell-off Thursday. The tobacco giant’s share price closed out the day down 7.3%, despite gains of 1.04% for the S&P 500 index in the daily session.
British American Tobacco (BAT) published preliminary full-year results for 2024 before the market opened this morning. While earnings came in better than anticipated, sales fell short of expectations — and guidance signaled that continued headwinds could be on the horizon.
British American Tobacco stock sinks with earnings update
British American Tobacco posted an adjusted profit of 362.5 British pounds per share on sales of 25.87 billion pounds. Meanwhile, the average analyst estimate had called for earnings per share of 362.2 pounds on sales of 26.11 billion pounds.
BAT’s overall revenue increased 1.3% year over year, aided by an 8.9% sales increase for its new category segment. Smokeless products made up 17.5% of overall revenue, and the company added 3.6 million new customers in the category — bringing its total count to 29.1 million. Revenue for cigarettes and other combustible products rose 0.1% year over year, with a 5.3% pricing increase offsetting a 5.2% decline in unit volumes.
The company also announced a 2% increase for its dividend and a new stock buyback program. While there were some bright spots in the report, profitability was dragged down by a 6.2-billion-pound settlement in a Canadian legal case — and investors weren’t happy with management’s forward guidance.
What’s next for British American Tobacco?
For this year, BAT is guiding for revenue growth of just 1%. Meanwhile, growth for adjusted operating profit is expected to come in between 1.5% and 2.5%. Management expects that new taxes in Bangladesh and Australia will be a drag on its combustible tobacco products this year. Looking ahead to 2026, the company is guiding for sales growth between 3% and 5%, and adjusted operating profit growth between 4% and 6%.
While British American Tobacco stock saw big sell-offs today, it’s full-year report really doesn’t look that bad. The company’s dividend continues to look sustainable, and its smokeless segment is posting encouraging growth. With that in mind, long-term investors shouldn’t sweat today’s volatility.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c. and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.
