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Reynolds American Reports Earnings Beat

Reynolds American has tightened its full-year earnings per share guidance to $4.95 to $5.05 a share vs. the prior guidance of $4.90 to $5.05, while reporting consensus-beating third-quarter earnings.
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NEW YORK (

TheStreet

) --

Reynolds American

(RAI)

has tightened its full-year earnings per share guidance to $4.95 to $5.05 a share vs. the prior guidance of $4.90 to $5.05, while reporting consensus-beating third-quarter earnings.

"Reynolds favorably narrowed its EPS guidance range to $4.95 to $5.05 suggesting 7% to 9% growth. We are increasing our earnings estimate to $5 per share on this quarter's strength," Stifel Nicolaus analyst Christopher Growe noted in an equity research report.

The company reported third-quarter net income increase of 5.2% to $381 million, or $1.30 a share, from $362 million, or $1.24 a share the previous year.

Third-quarter adjusted earnings per share was $1.35, vs. the average analyst estimate of $1.34.

Net sales rose by 4% to $2.239 billion, from $2.152 billion the previous year. The sales consensus estimate for the quarter was $2.2 billion.

During the quarter "higher pricing and key-brands volume; promotional and pricing efficiencies; and productivity gains more than offset lower overall cigarette volume," the company said in a press release.

Shares of Reynolds American are down 0.9% to $62.44. "We continue with our hold rating viewing the stock as properly valued here with limited upside. The stock trades right in line with tobacco, and we believe tobacco's historically narrow gap to the market and consumer staples," Stifel analyst Christopher Growe wrote in a client note.

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-- Written by Andrea Tse in New York.

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