Cigarette manufacturer Imperial Brands(LSE: IMB) has seen its share price shudder to four-and-a-half-month lows on Tuesday after the release of latest full-year numbers.
The Davidoff and JPS manufacturer has fallen after announcing plans to spend £750m on fresh cost-cutting measures that it says will realise cost savings of £300m a year by 2020. But I believe share pickers have overlooked another resilient performance in what remains a challenging marketplace.
Imperial Brands saw revenues jump 9.3% in the 12 months to September 2016, to £27.6bn, helped by the growing appeal of its so-called 'Growth Brands' -- volumes of these rose 4.3% in the period, to 151.3bn sticks.
This helped operating profit at Imperial Brands shoot 12.1% higher during the year, to £2.2bn. And the smoking giant announced that it would plough an extra £300m into "selected quality growth opportunities", a move that should keep sales of its blue ribbon labels rising across the globe.
A top-tier product stable is a quality shared by Britain's other cigarette giant, British American Tobacco. Imperial Brands' rival reported in late October that its 'Global Drive Brands' like Dunhill and Pall Mall grew market share by 9.8% during January-September, with consumer demand continuing to climb across Europe, Asia and Latin America.
And fellow FTSE 100 'sin' stock Diageo is also reaping the rewards of a popular product portfolio and wide geographical footprint. Mammoth investment in its six biggest global brands like Guinness and Johnnie Walker helped sales jump again in the year to June 2016. And Diageo's appetite for acquisition continues to bolster its performance in established and developing regions alike.
But I think it could be argued that Imperial Brands' attractive metrics make it a sweeter pick for value seekers.
A projected 15% earnings rise for fiscal 2017 leaves the tobacco titan dealing on a P/E rating of 15.1 times. This figure trumps forward multiples of 20 times and 18.5 times for Diageo and British American Tobacco, respectively.
And Imperial Brands carries a dividend yield of 4.2% for the current period, beating corresponding figures of 3% for Diageo and 3.6% for its tobacco rival.
Mix it up
Those seeking market-mashing value are unlikely to be attracted by Fever- Tree Drinks(LSE: FEVR), either.
The firm may be expected to print a 60% earnings rise in 2016. But this results in a colossal P/E rating of 59.4 times. And a forward dividend yield of 0.5% trails the blue-chip average of 3.5% by some distance.
However, I believe Fever-Tree Drinks is worthy of serious attention from growth hunters, just like its big-cap brothers. The FTSE AIM 50 stock leapt 11% on Monday, after announcing that "results for the full year... will be materially ahead of current market expectations."
In particular, Fever-Tree announced that "performance in the UK, the group's largest market, has been particularly strong as new distribution gains have combined with a continued rate of sales growth."
News that demand for Fever-Tree's high-end mixers domestic operations has held up well in the wake of June's EU referendum underlines the strength of the company's brand. But this is only part of the story, as Fever-Tree's heavy international bias also offers plenty of upside potential -- analyst firm Cenkos puts global mixer sales at £8bn per annum.
While expensive on paper, I reckon Fever-Tree -- like Imperial Brands, et al -- has the potential to deliver stunning shareholder returns in the years ahead. And this makes the company worthy of serious attention.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Diageo and Imperial Brands. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.