Head-To-Head Analysis: British American Tobacco (OTCMKTS:BTAFF) & Philip Morris International (NYSE:PM)

British American Tobacco (OTCMKTS:BTAFF) and Philip Morris International (NYSE:PM) are both consumer defensive companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Institutional & Insider Ownership

39.7% of British American Tobacco shares are owned by institutional investors. Comparatively, 78.6% of Philip Morris International shares are owned by institutional investors. 0.1% of Philip Morris International shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares British American Tobacco and Philip Morris International”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
British American Tobacco	N/A	N/A	N/A	$1.92	30.25
Philip Morris International	$89.44 billion	2.67	$7.06 billion	$5.52	27.81

Philip Morris International has higher revenue and earnings than British American Tobacco. Philip Morris International is trading at a lower price-to-earnings ratio than British American Tobacco, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and price targets for British American Tobacco and Philip Morris International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
British American Tobacco	0	0	0	0	0.00
Philip Morris International	0	1	12	0	2.92

Philip Morris International has a consensus price target of $189.00, indicating a potential upside of 23.13%. Given Philip Morris International’s stronger consensus rating and higher possible upside, analysts clearly believe Philip Morris International is more favorable than British American Tobacco.

Profitability

This table compares British American Tobacco and Philip Morris International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
British American Tobacco	N/A	N/A	N/A
Philip Morris International	9.33%	-122.14%	17.59%

Dividends

British American Tobacco pays an annual dividend of $1.42 per share and has a dividend yield of 2.5%. Philip Morris International pays an annual dividend of $5.88 per share and has a dividend yield of 3.8%. British American Tobacco pays out 74.3% of its earnings in the form of a dividend. Philip Morris International pays out 106.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Philip Morris International has increased its dividend for 17 consecutive years. Philip Morris International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Philip Morris International beats British American Tobacco on 11 of the 14 factors compared between the two stocks.

About British American Tobacco

British American Tobacco p.l.c. engages in the provision of tobacco and nicotine products to consumers worldwide. It also offers vapour, heated, and modern oral nicotine products; combustible cigarettes; and traditional oral products, such as snus and moist snuff. The company offers its products under the Vuse, glo, Velo, Grizzly, Kodiak, Dunhill, Kent, Lucky Strike, Pall Mall, Rothmans, Camel, Natural American Spirit, Newport, Vogue, Viceroy, Kool, Peter Stuyvesant, Craven A, State Express 555 and Shuang Xi brands. It also distributes its products to retail outlets. British American Tobacco p.l.c. was founded in 1902 and is based in London, the United Kingdom.

About Philip Morris International

Philip Morris International Inc. operates as a tobacco company working to delivers a smoke-free future and evolving portfolio for the long-term to include products outside of the tobacco and nicotine sector. The company's product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor, and oral nicotine products primarily under the IQOS and ZYN brands; and consumer accessories, such as lighters and matches. It also offers wellness and healthcare products. Philip Morris International Inc. was incorporated in 1987 and is headquartered in Stamford, Connecticut.