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

$15.61 billion



Trailing-12-Month Revenue

$4.19 billion


Chairman/CEO Murray Kessler

CFO David Taylor

Return on Assets (average, past 3 years)



$2.34 billion / $1.76 billion

Dividend Yield



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 319 members who have rated Lorillard believe the stock will outperform the S&P 500 going forward. These bulls include kleyau and oldmanandthesea, who is ranked in the top 15% of our community.

Earlier this year, kleyau touched on Lorillard's solid fundamentals: "Cheap for a tobacco company, with one of the most effective, in ROA and ROI terms, management teams, good margins for the industry."

In fact, Lorillard boasts a three-year average operating margin of 44.5%. That's higher than that of other tobacco plays such as Altria (37.3%), Reynolds (30.3%), and Philip Morris International (NYSE: PM) (40.9%).

CAPS All-Star oldmanandthesea elaborates on the bull case:

[Lorillard] will continue to add some diversification to the portfoliol; expect sales to grow in the low single digits and mkt share in menthols will continue to hold.

Will continue to increase dividends and buy back stock (they have already leveraged their finances to capitalize purchases -- smart move) ...

Eventually, LO will sort of "run out of options" so to speak in terms of what it can do to grow share price and will sell; it is only a small player among giants but has an incredibly valuable brand that others would love to add to their portfolios -- premium brand menthols, very high profits margins, minority consumers, etc. ...

Personally, with cheap financing available & the cost cutting another big could implement, I think another company would move on the purchase within the next few years but LO will do well regardless.

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