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Tale of the Tape

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Reynolds' Q3 Earnings, Sales Miss Estimates, Narrows FY View
October 19, 2016


Trades from $3

Reynolds American Inc. (RAI - Analyst Report) is one of the leading manufacturer and seller of cigarettes and smokeless tobacco products in U.S. and owns popular brands like Camel and Pall Mall.

Reynolds has seen soft cigarette shipment volume trends for the past few quarters, due to a general shift away from tobacco products resulting from accelerating prices of cigarettes and worldwide anti-tobacco campaigns.

The company is thus putting greater focus on the growing electronic cigarettes to boost sales. Reynolds completed its nationwide expansion of its e-cigarette brand Vuse which affected sales positively. The merger between Reynolds and Lorillard Inc. completed in June 2015 has consolidated the tobacco industry and increased growth opportunities for Reynolds in the tobacco category.

Investors should also note that earnings estimate for RAI has been revised downward during the last 30 days. RAI has a mixed history when it comes to recent earnings reports as the stock has posted inline results in two of the last four quarters, negative surprise in two remaining quarters, with an average negative surprise of 2.23%.

REYNOLDS AMER Price, Consensus and EPS Surprise


REYNOLDS AMER Price, Consensus and EPS Surprise | REYNOLDS AMER Quote

Currently, RAI has a Zacks Rank #4 (Sell), but that could definitely change following Reynolds' earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: RAI reported lower than expected earnings. Our consensus earnings estimate called for EPS of 64 cents, while RAI reported earnings of 61 cents. Investors should note that these figures take out stock option expenses.

Revenues: RAI reported revenues of $3.20 billion. This missed our consensus estimate of $3.36 million.

Key Stats to Note: Operating Income increased 11% year over year.

Reynolds narrowed the range of its 2016 earnings guidance.

Stock Price: Inactive in pre-market trading

Check back later for our full write up on this RAI earnings report later.

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