Reynolds American Inc

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RAI : NYSE : Consumer Goods
$63.67 | %
Today's Range: 63.535 - 63.81
Avg. Daily Volume: 6326200.0
04/21/17 - 4:01 PM ET

Financial Analysis

REYNOLDS AMERICAN INC's gross profit margin for the fourth 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 0.45 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 18.95% 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 Q4 FY16 Q4 FY15
Net Sales ($mil)3186.03054.0
EBITDA ($mil)1522.01046.0
EBIT ($mil)1491.01015.0
Net Income ($mil)851.0279.0

Balance Sheet Q4 FY16 Q4 FY15
Cash & Equiv. ($mil)2051.02716.0
Total Assets ($mil)51095.053224.0
Total Debt ($mil)13165.017447.0
Equity ($mil)21711.018252.0

Profitability Q4 FY16 Q4 FY15
Gross Profit Margin62.7756.61
EBITDA Margin47.7734.25
Operating Margin46.833.24
Sales Turnover0.240.2
Return on Assets11.886.11
Return on Equity27.9717.82
Debt Q4 FY16 Q4 FY15
Current Ratio0.851.17
Interest Expense150.0185.0
Interest Coverage9.945.49

Share Data Q4 FY16 Q4 FY15
Shares outstanding (mil)1425.831427.34
Div / share0.460.36
Book value / share15.2312.79
Institutional Own % n/a n/a
Avg Daily Volume6427784.07883379.0


BUY. This stock's P/E ratio indicates a discount compared to an average of 19.03 for the Tobacco industry and a discount compared to the S&P 500 average of 24.92. Conducting a second comparison, its price-to-book ratio of 4.19 indicates a premium versus the S&P 500 average of 2.99 and a significant discount versus the industry average of 10.35. 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.

1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
RAI 15.01 Peers 19.03   RAI 71.06 Peers 31.42

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

RAI is trading at a 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.

1 2 3 4 5
premium   discount
  Price to
1 2 3 4 5
premium   discount
RAI 23.11 Peers 14.23   RAI NM Peers 1.12

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 4.19 Peers 10.35   RAI 57.11 Peers 43.10

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.

1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
RAI 7.27 Peers 6.83   RAI 17.12 Peers 1.31

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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