3 Businesses Doing What They Promised
So far in 2026, the S&P 500 has been anywhere from -7.5% to +11.2%.
But individual stocks have been all over the place.
Look at Micron - it’s been anywhere from flat to +285%.
Source: Fiscal.ai
And that includes a 37% drawdown in the past month.
Source: Fiscal.ai
Micron is a company that at one point was worth $1.3 trillion - this isn’t some volatile microcap company.
What’s going on?
The answer lies in this chart, which shows the VIX and the VIXEQ.
VIX (dark line): Measures the volatility of the S&P 500 based on options prices
VIXEQ (green line): Measures the volatility of the average individual stock within the index
The main thing to take away from this chart is that right now, the average stock is much more volatile than the index, and the gap between the lines has been getting wider.
Earnings season is here, and it’s a great excuse for Mr. Market to change his moods very quickly, so I don’t expect the volatility in individual stocks to settle down any time soon.
Earnings have caused some volatility in our portfolio as well.
We’ve seen anything from +30% to -15% in the past week as earnings reports roll in.
Today I’ll give you an update on the first 3 companies that have reported earnings since Wednesday.
On Monday, I’ll update you on the two that had the most volatile earnings reactions.
British American Tobacco
When Mr. Market gets depressed, long term dividend investors get to go shopping.
We bought British American Tobacco when it was yielding nearly 9%, buying it when the market was worried about the debt load, and the negative earnings number that was brought down by non-cash charges.
Source: Fiscal.ai
Since then Mr. Market’ volatility has worked in our favor, with the stock up roughly 75% since we bought it.
The company just released its half-year 2026 earnings, and Mr. Market barely flinched.
Let’s give you an overview of how they did.
Financial Highlights
Group Revenue: +1.4% to £12.24 billion
+2.9% at constant FX
Reported Profit from Operations: -15.8% to £4.27 billion
This drop is mainly because H1 2025 and 2026 had several one-off events:
Litigation Credit: H1 2025 included a £575 million credit regarding Canadian litigation provisions, H1 2026 only had a £38 million credit
Asset Sales: H1 2025 had a £904 million gain from a partial sale of BAT’s stake in India’s ITC Ltd. and a £333 million gain from the demerger of ITC’s hotel business.
Restructuring Expenses: H1 2026 includes £370 million in Fit2Win restructuring charges (£228 million are non-cash to upgrade manufacturing assets and machinery)
Adjusted Profit from Operations (Constant FX, Adj. for Canada): +3.5% to £5.42 billion
Reported Diluted EPS: -28.6% to 145.3p.
This is affected by the same things as Profit from Operations
Adjusted Diluted EPS (Constant FX, Adj. for Canada): +7.9% to 167.8p.
Segments
The most important piece of British American Tobacco’s earnings report was that the new categories keep growing faster and faster.
Their revenue grew 18% in the first 6 months of this year.
New category revenue is now 19.8% of the total Group revenue.
The strongest performer here is Velo, their tobacco pouch product.
It’s gaining market share in the U.S.
As well as globally.
Glo, the heated tobacco product was the worst performer with revenue declining 11%.
Management said the decline in revenue was a combination of inventory adjustments and aggressive value-segment competition in Japan, Italy, and Poland.
The surprise in the new categories was Vuse, the vapor product was back to growth in the U.S.
This is because the FDA as well as state and federal enforcement agencies have been cracking down on illegal single-use vapes.
BAT plans a national rollout of adult-focused Vuse flavor variants in H2 2026, so we may see even more growth here this year.
Guidance and Capital Allocation
BAT reaffirmed their full year guidance, and narrowed the adjusted diluted EPS growth towards the middle of the 5%–8% guidance range.
They also told us that they’re on track to complete £1.3 billion in share buybacks in 2026, and plan to continue to raise the dividend with the cash flows.
This is an earnings report every owner of the business should be happy with.
That’s It For This Free Preview
But I’m curious, if you owned British American Tobacco and currently had:
A 9%+ dividend yield
An unrealized gain of +75%
One Dividend At A Time,
-TJ
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
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