Lorillard Shares Jumped: What You Need to Know

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of cigarette maker Lorillard (NYSE: LO  ) were smoking hot today, gaining as much as 13% in intraday trading after the company reported fourth-quarter results.

So what: Smashing the stereotype of high-yielding dividend stocks as boring plodders, Lorillard gave its shares the fuel to rocket higher when it reported adjusted earnings per share of $2.20, up 26% from last year. The profit growth came as quarterly sales registered YOY growth of 8.9%, to $1.6 billion. Wall Street analysts had expected the company to earn $1.95 per share on $1.08 billion in revenue.

Oh, and as to those dividends? They weren't left out of the fourth-quarter excitement. Lorillard announced that it's boosting its quarterly payout by 19%.

Now what: Lorillard's results are rightly being cheered by investors, but there are still some significant clouds still on the horizon for the company. Through its Newport brand, the company is the leading seller of menthol cigarettes in the U.S. While that has helped the company carve out a nice market position, it's putting it in an awkward spot as regulators consider new controls on menthol smokes.

Combine that concern with the historically high valuation that shares have garnered thanks to investors' recent infatuation with dividends, and even the company's strong earnings report leaves me a bit lukewarm on the stock.

Want to keep up to date on Lorillard? Add it to your Watchlist.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1777857, ~/Articles/ArticleHandler.aspx, 10/24/2016 4:24:25 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

6/12/2015 4:05 PM
LO.DL $0.00 Down +0.00 +0.00%
Lorillard CAPS Rating: ****