Shares of Lorillard, Inc (LO - Analyst Report) attained a new 52-week high of $50.94 on Oct 28 after it posted impressive third quarter 2013 results last week. Shares of this cigarette maker eventually closed at $50.54, reflecting a year-to-date return of 30.6%.
The company’s long-term estimated EPS growth rate is 102%. Average volume of shares traded over the last three months came in at approximately 2.800K.
Solid Third Quarter Results
On Oct 23, Lorillard reported its third quarter 2013 results, beating the Zacks Consensus Estimate for both earnings and revenue. Adjusted earnings of 83 cents per share surged 15.3% from the prior-year quarter’s earnings of 72 cents. The rising market share of its brands, higher sales, lower share count owing to share buyback activity, and continued success of its electronic cigarette brand – blu eCigs – proved to be Lorillard's strength in the third quarter of 2013. Lorillard acquired blu eCigs electronic cigarette brand of U.S. in Apr 2012.
Net sales in the reported quarter went up 10.0% year over year to $1.8 billion on the back of strong sales of electronic cigarettes as well as regular cigarettes. Net sales of the cigarette segment grew 7.1% owing to improved cigarette volume and higher cigarette selling prices. The sales of electronic cigarettes also grew driven by continued success of the blu eCigs brand, which was supported by brand building initiatives like a television advertising campaign and the launch of rechargeable kits.
We are impressed with the company’s strong dominance in the cigarette industry owing to its strong brands and high market share. It is quite well placed in the electronic cigarette industry as smokers are shifting their preference to electronic cigarettes due to rising health concerns. Following the blu eCigs brand, the company expanded in the wide UK electronic cigarette market with the acquisition of SKYCIG, a leading premium brand of electronic cigarettes in the U.K. on Oct 1. We believe the SKYCIG acquisition will further boost Lorillard’s sales as the e-cigarette segment is evolving rapidly.
Other Stocks to Consider
Other stocks in the consumer staples sector that are performing equally well and are worth considering include Chiquita Brands International Inc (CQB - Snapshot Report), Pinnacle Foods Inc (PF - Snapshot Report) and The J.M. Smucker Co. Inc. (SJM - Analyst Report), all of them with a Zacks Rank #2.