U.S. tobacco industry leader with significant pricing power, market share, and brand equity across multiple product categories; Solid profitability and strong predictable cash flow; Good track record managing litigation and regulatory risks; Potential medium- to long-term risk related to the U.S. Food and Drug Administration's (FDA) plan to potentially reduce nicotine in combustible cigarettes; Uncertain medium- to long-term impact on profitability from next generation products (NGP), which appear to be gaining further support from the FDA; and Long-term secular decline in U.S. cigarette volumes. Substantial free cash flow partly reflecting highly efficient operations and low capital expenditures; Low financial leverage, notwithstanding high shareholder payments; and Large Anheuser-Busch InBev SA/NV equity stake provides moderate cash flow diversification and potential financial flexibility.
