What happened

British American Tobacco (NYSE:BTI) outpaced the market last month by rising 16% compared to a 1.8% uptick in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally put shares in solidly positive territory so far this year, although the global tobacco giant remains lower by over 30% in the past 52 weeks.

A woman smoking an e-cigarette.

Image source: Getty Images.

So what

Investors were happy with the broader operating and financial metrics that the company revealed on the last trading day of February. That report showed that revenue rose 25%, or 3.5% after adjusting for recent acquisitions. Adjusted operating profit expanded at double that pace, in part because of success in marketing high-margin e-cigarettes. "[British American Tobacco] performed well in 2018," CEO Nicandro Durante told investors in a press release, "exceeding our target of high single-digit adjusted constant currency EPS growth."

Now what

Persistent declines in sales volumes for traditional cigarettes are pressuring the company's long-term earnings power. Investors are also worried about regulatory changes that might limit tobacco companies' ability to sell e-cigs. Investors have to weigh those risks against attractive aspects of owning this stock, including its over 6% annual dividend yield.