What a difference a few months can make. R.J. Reynolds
When Alyce Lomax last gave us the skinny on the big tobacco outfit, the firm had reported a wider loss and was struggling mightily, as usual, to keep discounters and Altria Group's
In fact, R.J. Reynolds lost over a point in market share for the quarter, but it didn't hold the firm back.
This morning's earning release shows flat revenues of $1.2 billion. Volume was down, but the company managed to move more of its higher-priced cigarettes to make up the difference. Earnings took a big 70% jump to $1.43 per share. Investors got more good news this morning when the firm settled a class action suit with tobacco growers.
The stock has been smoking all year, providing more than a double for folks who bought in last spring. And the ride may not be over yet, despite the soft sales. The company's cost-cutting is yielding even greater savings than expected, prompting R.J. Reynolds to raise its earnings guidance for the full year to a range near $5 per share.
That puts it on a forward P/E of around 12, within its historical norms. So, while it's not a screaming bargain, it is a leaner firm, with a history of copious free cash flow, much of which is paid out via the juicy 6% dividend yield.
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Fool contributor Seth Jayson owns no stake in any company mentioned above. View his Fool profile here.
