Imperial Brands: Not A Fat Pitch Any Longer, Downgrade To 'Hold'

Philipp Brohl763 FollowersFollow5ShareSavePlay(10min)CommentsSummaryImperial Brands has delivered a 57.43% total return since initial coverage, outperforming the NASDAQ and peer tobacco companies.Imperial Brands led the tobacco sector recovery, with a ∼200% total return from bear market lows, surpassing Japan Tobacco, Philip Morris, Altria, and British American Tobacco.At its nadir, Imperial Brands traded at just 5x P/FCF and offered an 11% dividend yield, reflecting extreme negative sentiment.Investors who bought the stock during peak pessimism have been rewarded with stellar returns as sector sentiment rebounded.At the current 13x P/E, the margin of safety is gone. Slow-growing companies should be bought at low valuations in order to achieve high returns and low risks. Imperial Brands isn't the fat pitch it once was, and I am downgrading to "Hold". J Studios/DigitalVision via Getty Images It has been a while since I last covered Imperial Brands (IMBBY). Since my initial analysis, the share price has risen by 43.48%, and the total return has been 57.43%, even outpacing the NASDAQ.This article was written byPhilipp Brohl763 FollowersFollowPhilipp is a seasoned value investor with nearly 20 years of experience in the field. He takes a global approach to investment opportunities, seeking out undervalued companies that offer a significant margin of safety, leading to attractive dividend yields and returns. While he does not limit his investments to specific sectors or countries, he focuses only on companies he thoroughly understands and can reasonably assess for future growth potential. Philipp is particularly enthusiastic when he identifies a company with a solid earnings track record trading at less than 8x free cash flow, which inspired his username: 8xfreecash.Analyst’s Disclosure: I/we have a beneficial long position in the shares of IMPERIAL BRANDS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.