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
Debt/Capital0.380.49
Interest Expense150.0185.0
Interest Coverage9.945.49


Share Data Q4 FY16 Q4 FY15
Shares outstanding (mil)1425.831427.34
Div / share0.460.36
EPS0.60.19
Book value / share15.2312.79
Institutional Own % n/a n/a
Avg Daily Volume6427784.07883379.0

Valuation


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.


Price/Earnings
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.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
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.

 
Price/Book
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.

 
Price/Sales
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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