Reynolds American Inc

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RAI : NYSE : Consumer Goods
$65.93 up 0.48 | 0.73%
Today's Range: 65.72 - 65.97
Avg. Daily Volume: 4686900.0
06/23/17 - 11:20 AM ET

Financial Analysis

REYNOLDS AMERICAN INC's gross profit margin for the first quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased. REYNOLDS AMERICAN INC has weak liquidity. Currently, the Quick Ratio is 0.55 which shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year.

At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by 2.56% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q1 FY17 Q1 FY16
Net Sales ($mil)2949.02917.0
EBITDA ($mil)1358.01311.0
EBIT ($mil)1326.01281.0
Net Income ($mil)780.03565.0

Balance Sheet Q1 FY17 Q1 FY16
Cash & Equiv. ($mil)3154.04455.0
Total Assets ($mil)51959.054408.0
Total Debt ($mil)13152.013716.0
Equity ($mil)21706.021163.0

Profitability Q1 FY17 Q1 FY16
Gross Profit Margin60.2260.88
EBITDA Margin46.0444.94
Operating Margin44.9643.91
Sales Turnover0.240.21
Return on Assets6.3211.81
Return on Equity15.1430.37
Debt Q1 FY17 Q1 FY16
Current Ratio0.870.99
Interest Expense149.0174.0
Interest Coverage8.97.36

Share Data Q1 FY17 Q1 FY16
Shares outstanding (mil)1426.841427.34
Div / share0.510.42
Book value / share15.2114.83
Institutional Own % n/a n/a
Avg Daily Volume4918761.07834639.0


BUY. REYNOLDS AMERICAN INC's P/E ratio indicates a premium compared to an average of 22.29 for the Tobacco industry and a premium compared to the S&P 500 average of 25.73. Conducting a second comparison, its price-to-book ratio of 4.32 indicates a premium versus the S&P 500 average of 3.08 and a significant discount versus the industry average of 11.07. The current price-to-sales ratio is well above the S&P 500 average and above the industry average, indicating a premium. The valuation analysis reveals that, REYNOLDS AMERICAN INC seems to be trading at a premium to investment alternatives within the industry.

1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
RAI 28.44 Peers 22.29   RAI 46.65 Peers 29.38

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

RAI is trading at a significant premium to its peers.


Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

RAI is trading at a significant premium to its peers.

1 2 3 4 5
premium   discount
  Price to
1 2 3 4 5
premium   discount
RAI 24.06 Peers 15.39   RAI NM Peers 1.28

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

RAI is trading at a significant premium to its peers.


Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

RAI's negative PEG ratio makes this valuation measure meaningless.

1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
RAI 4.32 Peers 11.07   RAI -52.18 Peers 26.34

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

RAI is trading at a significant discount to its peers.


Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, RAI is expected to significantly trail its peers on the basis of its earnings growth rate.

1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
RAI 7.48 Peers 7.25   RAI 8.66 Peers -0.23

Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

RAI is trading at a valuation on par with its industry on this measurement.


Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

RAI has a sales growth rate that significantly exceeds its peers.



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