Posts Tagged ‘rai’

  • Reynolds American’s Investors Day
    , November 12th, 2012 at 1:32 pm

    Reynolds American ($RAI) is holding its Investors Day today. Here’s some coverage:

    Reynolds American President and CEO Daan Delen said during Investors Day presentations Monday morning that the company is focusing over the long-term on emerging smoke-free products such as snus and its new electronic cigarette Vuse that offer larger margins and greater potential for growth.

    “Everything we’re working on from an innovation standpoint has a higher margin than cigarettes,” Delen said. “I think we’re very well positioned in an evolving market.”

    Officials with the Winston-Salem-based tobacco company said volumes have risen this year in smoke-free categories such as moist snuff and snus, particularly among younger demographics, while cigarette volumes continue to decline.

    But Delen emphasized that cigarettes are still the core focus and business for the tobacco company. He offered an internal mantra of “80/90/90,” which reflects that 80 percent of the company’s resources are still in the combustible tobacco space, 90 percent of its organizational resources focus on that area, and 90 percent of its research and development budget is centered on combustibles.

    “That is the category that is still going to deliver a lot of growth in the future,” Delen said, noting that the U.S. tobacco market continues to offer about a $14 billion “profit pool,” about 85 percent of which comes from cigarettes.

    But Reynolds American’s strategy on “transforming tobacco” is obvious, as Delen spent substantial time talking about other categories besides cigarettes in promoting the company’s efforts toward innovation.

    The shares are down to $40.85 right now. RAI may hit lowest close since June. The dividend now yields 5.8%.

  • Reynolds American Earns 79 Cents Per Share
    , July 24th, 2012 at 10:22 am

    Good news for Reynolds American ($RAI). The tobacco company earned 79 cents per share for their second quarter. That topped Wall Street’s forecast by three cents per share.

    Cigarette maker Reynolds American’s profit grew more than 35 percent in the second quarter as higher prices and cost-cutting helped offset a decline in the number of cigarettes it sold.

    The nation’s second-biggest tobacco company on Tuesday reported net income of $443 million, or 78 cents per share, for the three-month period ended June 30. That’s up from $327 million, or 56 cents per share, a year ago, when the company recorded charges related to a legal case that hurt its results.

    Adjusted earnings were 79 cents per share, beating analysts’ expectations of 76 cents per share.

    The maker of Camel, Pall Mall and Natural American Spirit brand cigarettes said revenue excluding excise taxes fell 4 percent to $2.18 billion from $2.27 billion a year ago. Analysts polled by FactSet expected revenue of $2.24 billion.

    The Winston-Salem, N.C., company said heavy promotional activity by its competitors drove its cigarette volumes down nearly 7 percent to 18.1 billion cigarettes, compared with an estimated total industry volume decline of 1.7 percent.

    Its R.J. Reynolds Tobacco subsidiary sold 4 percent less of its Camel brand and volumes of Pall Mall fell 3.6 percent.

    Camel’s market share fell slightly to 8.3 percent of the U.S. market, while Pall Mall’s market share fell 0.2 percentage points to 8.4 percent.

    The company has promoted Pall Mall as a longer-lasting and more affordable cigarette as smokers weather the weak economy and high unemployment, and has said half the people who try the brand continue using it.

    Reynolds American and other tobacco companies are also focusing on cigarette alternatives such as snuff and chewing tobacco for future sales growth as tax hikes, smoking bans, health concerns and social stigma make the cigarette business tougher.

    Volume for its smokeless tobacco brands that include Grizzly and Kodiak rose nearly 11 percent compared with a year ago. Its share of the U.S. retail market grew 1.7 percentage points to 32.4 percent.

    The most important news is that RAI reaffirmed its full-year forecast of $2.91 to $3.01 per share. RAI is on-track toward hitting that guidance.

  • 10-Year Yield Hits All-Time Low
    , July 16th, 2012 at 11:59 am

    The stock market dropped early on in today’s trading, but we regrouped and have made back everything we lost. Right now, the S&P 500 is holding on to a small gain.

    Both Johnson & Johnson ($JNJ) and Reynolds American ($RAI) got to new 52-week highs this morning. Tomorrow we’re going to receive earnings reports from JNJ and Stryker ($SYK). It will be interesting to hear what they have to say.

    The yield on the 10-year Treasury dropped to an all-time low today. The yield got to 1.442%.

  • Stocks Modestly Higher on Alcoa’s Earnings
    , July 10th, 2012 at 10:35 am

    The stock market is just slightly higher this morning. There’s some optimism that a German court will approve the eurozone’s new bailout fund. The bad news is that China’s trade growth plunged in June.

    After yesterday’s close, Alcoa ($AA) reported earnings of six cents per share which was one penny ahead of expectations. Since Alcoa is usually the first Dow component to report, its earnings report gets a lot of attention. The problem is that Alcoa is hardly representative of the larger economy.

    On Friday, we’ll get a better idea of how earnings season is going when JPMorgan Chase ($JPM) reports earnings. Obviously, we’ll also get an idea of how badly the bank has been shaken by the big trading losses that came from their London office.

    Bespoke Investment Group has a chart showing how Wall Street has chopped its earnings expectations for JPM. In May, the Street had been expecting $1.24 for JPM’s second quarter. Today it’s down to 79 cents per share. There have been similar drops from Morgan Stanley, Goldman Sachs and other big Wall Street firms.

    I’m hesitant to make any forecasts for JPM’s earnings report because the company has been very tight-lipped about what exactly happened. The key for us will be to see how well the bank’s fundamental business has performed. For the most part, that’s been good this year.

    On the Buy List, I see that Reynolds American ($RAI) has matched its 52-week high this morning. Johnson & Johnson ($JNJ) is only a few pennies away from hitting a fresh 52-week high. JNJ is up by more than 10% since its June 1st close. Not many people saw that rally coming.

  • Today is Fed Day
    , June 20th, 2012 at 11:09 am

    Today is Fed day. At 12:30, the Federal Reserve will release its latest policy statement. I don’t expect any major change, but traders will closely scrutinize today’s statement for any hint of more quantitative easing. I’m not holding my breath.

    Our Buy List continues to do well. Reynolds American ($RAI) is at another new high. After the close, Bed Bath & Beyond ($BBBY) will report its earnings. I’m expecting good news.

    The market has an odd wait-and-see attitude today. Stocks aren’t doing much of anything.

  • Reynolds American Raises Quarterly Dividend to 59 Cents Per Share
    , May 3rd, 2012 at 4:11 pm

    Reynolds American ($RAI) announced that it’s raising its quarterly dividend from 56 cents to 59 cents per share. Going by today’s closing price of $40.56, the annual dividend of $2.36 yields 5.82%. That’s the equivalent of 770 Dow points.

    Reynolds raised its dividend twice last year. First it went from 49 cents to 53 cents. Then it was raised to 56 cents.

  • Reynolds American Earns 63 Cents Per Share
    , April 24th, 2012 at 10:00 am

    Reynolds American ($RAI) reported first-quarter earnings of 63 cents per share, which was two cents below estimates. Quarterly revenues fell 2.9% to $1.93 billion which was below the revenue estimate of $1.97 billion.

    I said in CWS Market Review:

    I’m not so concerned if the company beats or misses by a few pennies per share. The important thing to watch for is any change in the full-year forecast of $2.91 to $3.01 per share. If Reynolds stays on track to meet its forecast, I think we can expect the tobacco company to bump up the quarterly dividend from 56 cents to 60 cents per share.

    Reynolds reiterated its full-year guidance of $2.91 to $3.01 which is the most important thing.

  • CWS Market Review – April 20, 2012
    , April 20th, 2012 at 5:16 am

    We’re entering the high tide of the first-quarter earnings season, and so far earnings have been quite good. Of course, expectations had been ratcheted down over the past several months, but there have still been fears on Wall Street that even the lowered expectations were too high.

    According to the latest figures, 103 companies in the S&P 500 have reported earnings and 82% have beaten Wall Street’s expectations. That’s very good. If this “beat rate” keeps up, it will be the best earnings season in at least ten years.

    Earnings for our Buy List stocks are doing especially well. JPMorgan Chase, Johnson & Johnson and Stryker all beat expectations. Plus, J&J did something I always love to see: raise their full-year forecast.

    Next week is going to be another busy earnings week for us; we have five Buy List stocks scheduled to report earnings. In this week’s issue, I’ll cover the earnings outlook for our Buy List. I’m expecting more great results from our stocks. I’ll also let you know what some of the best opportunities are right now (I doubt AFLAC will stay below $43 much longer.) But before I get to that, let’s take a closer look at our recent earnings reports.

    Three Earnings Beats in a Row

    In last week’s CWS Market Review, I said that I expected JPMorgan Chase ($JPM) to slightly beat Wall Street’s consensus of $1.14 per share. As it turned out, the House of Dimon did even better than I thought. On Friday, the bank reported earnings of $1.31 per share. Interestingly, JPM’s earnings declined slightly from a year ago, but thanks to stock repurchases, earnings-per-share rose a bit.

    The stock reacted poorly to JPM’s earnings—traders knocked the stock down from $45 to under $43—but I’m not too worried. The bank had a very good quarter and Jamie Dimon has them on a solid footing. Last quarter was better than Q4 and this continues to be one of the strongest banks on Wall Street. (If you want more details, here’s the CFO discussing JPM’s earnings.) Don’t be scared off; this is a very good stock to own and all the trends are going in the right direction. I rate JPMorgan Chase a “strong buy” anytime the shares are less than $50.

    On Tuesday, Stryker ($SYK) reported Q1 earnings of 99 cents per share which matched Wall Street’s forecast. Last week, I said that 99 cents “sounds about right.” I was pleased to see that revenues came in above expectations and that gross margins improved. That’s often a good sign that business is doing well.

    Stryker’s best news was that it reiterated its forecast for “double-digit” earnings growth for this year. I always tell investors to pay attention when a company reiterates a previous growth forecast. I think too many investors tend to ignore a reiteration as “nothing new,” but it’s good to hear from a company that its business plan is still on track. I suspect that Stryker will raise its full-year forecast later this year. Stryker is an excellent buy up to $60.

    Last week, I said that Johnson & Johnson ($JNJ) usually beats Wall Street’s consensus by “about three cents per share.” This time they beat by two cents which is probably more of a testament to how well the company controls Wall Street’s expectations. For Q1, J&J earned $1.37 per share. I’ve looked at the numbers and this was a decent quarter for them.

    For the first time in a while, I’m excited about the stock. A new CEO is about to take over, and the company will most likely announce their 50th-consecutive dividend increase. The company also won EU approval for its Synthes acquisition. But the best news is that the healthcare giant raised its full-year guidance by two cents per share. The new EPS range is $5.07 to $5.17. Johnson and Johnson is a good stock to own up to $70 per share.

    Focusing on Next Week’s Earnings Slate

    Now let’s take a look at next week. Tuesday, April 24th will be a busy day for us as AFLAC ($AFL), Reynolds American ($RAI) and CR Bard ($BCR) are all due to report. Then on Wednesday, Hudson City ($HCBK) reports and on Friday, one of our quieter but always reliable stocks, Moog ($MOG-A), will report earnings.

    Let’s start with AFLAC ($AFL) since that continues to be one of my favorite stocks and because it has slumped in recent weeks. AFLAC has said that earnings-per-share for this year will grow by 2% to 5% and that growth next year will be even better. Considering that the insurance company made $6.33 per share last year, that means they can make as much as $6.65 this year and close to $7 next year.

    So why are the shares near $42 which is less than seven times earnings? I really don’t know. AFLAC has made it clear that they shed their lousy investments in Europe. Wall Street’s consensus for Q1 earnings is $1.65 per share which is almost certainly too low. I think results will be closer to $1.70 per share but I’ll be very curious to hear any change in AFLAC’s full-year forecast. Going by Thursday’s close, AFLAC now yields more than 3.1% which is a good margin of safety. AFLAC continues to be an excellent buy up to $53 per share.

    I’ve been waiting and waiting for CR Bard ($BCR) to break $100. The medical equipment stock has gotten close but hasn’t been able to do it just yet. Maybe next week’s earnings report will be the catalyst. Three months ago, Bard said to expect Q1 earnings to range between $1.53 and $1.57. That sounds about right. I like this stock a lot. Bard has raised its dividend every year for the last 40 years. It’s a strong buy up to $102.

    With Reynolds American ($RAI), I’m not so concerned if the company beats or misses by a few pennies per share. The important thing to watch for is any change in the full-year forecast of $2.91 to $3.01 per share. If Reynolds stays on track to meet its forecast, I think we can expect the tobacco company to bump up the quarterly dividend from 56 cents to 60 cents per share.

    Reynolds American has been a bit of a laggard this year. It’s not due to anything they’ve done. It’s more of a result of the theme I’ve talked about for the past few weeks: investors leaving behind super-safe assets for a little more risk. It’s important to distinguish if a stock isn’t doing well due to poor fundamentals or due to changing market sentiment. Reynolds is still a very solid buy. The shares currently yield 5.4%.

    Hudson City Bancorp ($HCBK) raced out to a big gain for this year, but it’s given a lot back in the past month. The last earnings report was a dud, but the bank is still in the midst of a recovery. Some patience here is needed. Wall Street’s consensus for Q1 is for 15 cents per share. I really don’t know if that’s in the ballpark or not, but what’s more important to me is the larger trend. Hudson City is cheap and a lot of folks would say there’s a good reason. I think the risk/reward here is very favorable. At the current price, Hudson City yields 4.8%. The shares are a good buy up to $7.50.

    As I mentioned before, Moog ($MOG-A) is one of our most reliable stocks. The company has delivered a string of impressive earnings reports. Moog has said that it sees earnings for this year of $3.31 per share (note that their fiscal year ends in September). That gives the stock a price/earnings ratio of 12.2. I think Moog can be a $50 stock before the year is done.

    There are three Buy List stocks due to report soon but the companies haven’t told us when: Ford ($F), DirecTV ($DTV) and Nicholas Financial ($NICK). Ford and Nicholas are currently going for very good prices. They usually report right about now, so the earnings report may pop up any day now. I think both stocks are at least 30% undervalued.

    That’s all for now. Next week will be a busy week for earnings. We’re also going to have a Fed meeting plus the government will release its first estimate for Q1 GDP growth. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

    – Eddy

  • Reynolds American Brings Out the Knife
    , March 14th, 2012 at 9:59 am

    Reynolds American ($RAI) announced today that it will cut 10% of its U.S. workforce by the end of 2014. That sounds dramatic but a lot of it will be achieved by normal turnover.

    Reynolds said this move will save $25 million this year and $70 million by 2015.

    Reynolds American pegged the expected cost of the work-force reduction at about $110 million, which reflects severance payments and other costs. The company noted it will take a charge in the first quarter that will include those costs.

    “Our businesses’ four key brands are all on a growth trajectory,” said Chief Executive Daniel M. Delen. “In order to sustain that growth, we need to ensure we have the financial resources and employees aligned behind the right programs and processes.”

    As cigarette volumes have declined across the tobacco industry, Reynolds American, the nation’s second-largest tobacco company behind Altria Group Inc. (MO), has shifted its focus toward a few key brands. The company has also diversified into smokeless tobacco.

    If the $70 million figure is accurate, we’re talking about 12 cents per share per year. That’s not so small. These cuts are certainly painful, but it’s good to see that Reynolds is staying alert to cutting costs.

  • Finally, Some Volatility
    , March 6th, 2012 at 11:31 am

    This may come as a shock, people, but we actually have some volatility today. Unfortunately, it’s the bad kind. The market is again worried about concerns from Europe. (Will 2011 ever end?)

    The S&P 500 is currently down 17 points or 1.3%. If that holds up, it will be the biggest fall all year and it will be nearly twice as big as the second-biggest fall this year.

    There’s also a major divide in this market and it closely resembles the opposite of what we’ve seen most of this year. (Today is the opposite of what’s been happening this year which was the opposite of what happened late last year. So today resembles much of last year.)

    So far, 2012 has been characterized by low volatility, rising stocks prices led by cyclicals and small-caps. Today, cyclicals, small-caps, financials and gold are getting hit the hardest. Financials are the worst-performing sector. AFLAC ($AFL) is down about 4%.

    The only areas that are doing well are the defensive stocks. This means staples, utilities and many dividend stocks. On our Buy List, Reynolds American ($RAI) is slightly up while Sysco ($SYY) is slightly down.