Reynolds American Inc

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RAI : NYSE : Consumer Goods
$57.75 up 1.8 | 3.2%
Today's Range: 57.63 - 58.15
Avg. Daily Volume: 8031600.0
01/17/17 - 1:25 PM ET

Financial Analysis


REYNOLDS AMERICAN INC's gross profit margin for the third quarter of its fiscal year 2016 has increased when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. REYNOLDS AMERICAN INC has very weak liquidity. Currently, the Quick Ratio is 0.42 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year.

During the same period, stockholders' equity ("net worth") has increased by 16.59% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q3 FY16 Q3 FY15
Net Sales ($mil)3205.03161.0
EBITDA ($mil)1557.01333.0
EBIT ($mil)1526.01298.0
Net Income ($mil)861.0657.0


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)1959.03185.0
Total Assets ($mil)51792.053774.0
Total Debt ($mil)13179.017930.0
Equity ($mil)21544.018477.0


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin63.6856.5
EBITDA Margin48.5842.17
Operating Margin47.6141.06
Sales Turnover0.240.18
Return on Assets10.625.8
Return on Equity25.5316.89
Debt Q3 FY16 Q3 FY15
Current Ratio0.981.13
Debt/Capital0.380.49
Interest Expense150.0189.0
Interest Coverage10.176.87


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)1425.791429.1
Div / share0.460.36
EPS0.60.46
Book value / share15.1112.93
Institutional Own % n/a n/a
Avg Daily Volume8051420.04310745.0

Valuation


BUY. This stock's P/E ratio indicates a discount compared to an average of 20.49 for the Tobacco industry and a significant discount compared to the S&P 500 average of 25.49. Conducting a second comparison, its price-to-book ratio of 3.69 indicates a premium versus the S&P 500 average of 2.84 and a significant discount versus the industry average of 21.11. The current price-to-sales ratio is well above the S&P 500 average and above the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, REYNOLDS AMERICAN INC proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
RAI 14.52 Peers 20.49   RAI 70.91 Peers 26.73

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

RAI is trading at a significant discount 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.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
RAI 21.86 Peers 13.85   RAI NM Peers 4.20

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.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
RAI 3.69 Peers 21.11   RAI 44.63 Peers 1.89

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.

 

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

RAI is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
RAI 6.42 Peers 6.02   RAI 26.81 Peers -0.76

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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