Tobacco maker Reynolds American
Late last week, the company reported that Q3 brought a 12% increase in adjusted earnings per share on a 4.9% increase in net sales. In very much the same fashion as rival Altria
Another way the company can compensate for sluggish cigarette sales is its smokeless tobacco arm. Conwood contributed another impressive quarter, with an 18.4% increase in pro-forma operating income on a 12.3% increase in volume versus the year-ago quarter. The segment picked up additional market share in the quarter, and new styles are being tested in hopes of continuing the growth.
The 4% decrease in domestic shipment volume for cigarettes that Reynolds American experienced during the third quarter indicates a challenge facing the tobacco industry. That does not mean that this market cannot remain profitable. International exposure as well as the smokeless tobacco market have brought booming business to British American Tobacco
With pricing power and a 5.4% dividend yield, Reynolds American still is an attractive opportunity for income investors and value investors alike. We'll see whether the company will be able to once again produce monstrous returns, but in any case, its consistent performance makes its stock a relatively safe bet.
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