Reynolds American (NYSE: RAI) shares currently have a dividend yield of 5.50%. Reynolds American Inc., through its subsidiaries, manufactures and sells cigarette and other tobacco products in the United States. The company operates through RJR Tobacco, American Snuff, and Santa Fe segments. The company has a P/E ratio of 19.31. Currently there is 1 analyst that rates Reynolds American a buy, 1 analyst rates it a sell, and 8 rate it a hold. The average volume for Reynolds American has been 2,531,800 shares per day over the past 30 days. Reynolds American has a market cap of $23.9 billion and is part of the tobacco industry. Shares are up 4.5% year to date as of the close of trading on Thursday. TheStreet Ratings rates Reynolds American as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Tobacco industry and the overall market, REYNOLDS AMERICAN INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The debt-to-equity ratio is somewhat low, currently at 0.97, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
- Net operating cash flow has increased to $655.00 million or 13.12% when compared to the same quarter last year. Despite an increase in cash flow of 13.12%, REYNOLDS AMERICAN INC is still growing at a significantly lower rate than the industry average of 67.78%.
- 46.80% is the gross profit margin for REYNOLDS AMERICAN INC which we consider to be strong. Regardless of RAI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RAI's net profit margin of 6.68% is significantly lower than the industry average.
- REYNOLDS AMERICAN INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, REYNOLDS AMERICAN INC reported lower earnings of $2.24 versus $2.41 in the prior year. This year, the market expects an improvement in earnings ($3.21 versus $2.24).
- You can view the full Reynolds American Ratings Report.
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