Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, cigarette specialist Lorillard (NYSE: LO) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Lorillard's business and see what CAPS investors are saying about the stock right now.

Lorillard facts

Headquarters (founded) Greensboro, N.C. (1760)
Market Cap $12.75 billion
Industry Tobacco
Trailing-12-Month Revenue $3.96 billion
Management

CEO Murray Kessler

CFO David Taylor
Return on Assets (average, past 3 years) 36.5%
Cash/Debt $2.1 billion / $1.8 billion
Dividend Yield 5.3%
Competitors

Altria (NYSE: MO)

Reynolds American (NYSE: RAI)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 95% of the 253 members who have rated Lorillard believe the stock will outperform the S&P 500 going forward. These bulls include harleytodd and dsp444.

Earlier this year, harleytodd brought Lorillard's magical qualities to our community's attention: "Magic Formula stock. Strong balance sheet and nice yield. Smoking is not going away so we might as well profit from it."

Lorillard's dominant Newport brand, which owns 35% of the menthol market, continues to provide the company with a clear competitive edge. Due in large part to Newport's premium pricing, Lorillard's three-year average operating margin (44%) is higher than that of rivals Altria (35.4%) and Reynolds American (29.6%), as well as foreign players Philip Morris International (NYSE: PM) (40.6%) and British American Tobacco (NYSE: BTI) (30.5%).

CAPS member dsp444 elaborates on the Lorillard bull case:

Its still on the Magic Formula screen, so I might choose to hang on for another year. Earnings and cash flows have been pretty solid. Has a large cash hoard, but in the last year took on a lot of debt, which actually drops the company book value negative. Seems to offer very good returns on investments and high margins. Its hard to pass all that up while collecting a solid dividend.

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