Up 73% in one year, is this the best value stock in the FTSE 100?

In the wake of Donald Trump’s tariff tantrum, it’s easy to overlook how well some UK companies have fared in the last year. Today, I’m focusing on one big winner and asking whether it might (still) be considered the best value stock in the FTSE 100.

Smokin’ hot

The star performer is tobacco giant Imperial Brands (LSE: IMB). In one year, this supposedly boring, low-growth business has climbed 73% in value. Put another way, a £10,000 investment in the company in April 2024 would now be worth somewhere in the region on £17,300.

This staggering return highlights how buying stocks trading on low valuations has the potential to be extremely lucrative if the stars align. By comparison, the index is up 5% over the same period.

But the good news doesn’t stop there. On top of that magnificent capital gain, holders will have received a total of 153.42p per share in dividends!

Revenue jumps

So why has this stock done so well? One reason is good, old-fashioned earnings growth. Imperial Brands managed to increase adjusted earnings per share by 10.9% in FY24 (ending 30 September).

At least some of this was down to rising popularity of next generation products. Think oral nicotine pouches, vapes and e-cigarettes. In the last financial year, net revenue from this division jumped 26%. On top of this, investors cheered news of a £1.25bn share buyback planned for 2025 and a 4.5% hike to the total dividend.

Other developments since these results were announced have clearly done no harm either. Trump’s decision to withdraw the Food and Drug Administration’s (FDA) plan to ban menthol cigarettes is one example. These make up no less than one-third of the tobacco industry’s total market share in the US.

Still cheap

Now, I’d normally be wary of a stock that’s managed a 73% gain in 12 months. Surely this must leave the valuation looking seriously stretched?

Well, this doesn’t seem to be the case here. Before markets opened this morning (16 April), the shares were changing hands for a little over nine times forecast FY25 earnings. That’s slightly higher than the firm’s average of eight over the last five years. Then again, it’s still far below the long-term average within the FTSE 100.

Imperial’s income credentials also remain strong. As things stand, the shares have a forecast dividend yield of 5.5% — significantly more than the index’s 3.7%.

This cash can never be guaranteed, of course. However, I’d be staggered if there were any immediate issues with it being paid. Assuming analyst calculations aren’t too wide of the mark, the 2025 dividend is expected to be covered almost twice by profit.

More to come?

Increased regulation of NGPs could easily dent sentiment. The question also remains as to whether they can ever make up for the ongoing global decline in cigarette sales, particularly in developed markets.

But I reckon this company still warrants consideration as part of a diversified portfolio. While it’s a tough ask for Imperial to replicate its form over the last year going forward, a positive set of half-year numbers in May and the current appeal of defensive stocks could maintain the momentum.

The best value stock in the FTSE 100? It’s still a contender, in my opinion and is worth considering.