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BATs headline profitability was good until it acquired Reynolds American Profitability, measured by return on capital employed, is a key metric because it tells you a lot about: How competitive the company is (highly competitive companies tend to produce consistently higher returns on capital) How fast the company can grow by organically reinvesting some of its earnings (this tends to be lower risk than borrowing money to fund growth) In BATs case, before 2017 it was consistently producing a net return on capital of around 20%, which is about double the average for UK large-cap stocks

Log In to react to this comment.ReplyCancel Andrew on June 3, 2020 Just smoked some Dunhill Nightcap that is 5 years and 6 months old, the Latakia is somewhat subdued, but the Virginias have aged well

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