Reynolds American Inc (RAI): Today's Featured Consumer Goods Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Reynolds American ( RAI) pushed the Consumer Goods sector lower today making it today's featured Consumer Goods laggard. The sector as a whole closed the day down 1.2%. By the end of trading, Reynolds American fell $1.16 (-2.6%) to $42.89 on average volume. Throughout the day, 2.7 million shares of Reynolds American exchanged hands as compared to its average daily volume of 2.2 million shares. The stock ranged in price between $42.79-$44.10 after having opened the day at $43.92 as compared to the previous trading day's close of $44.05. Other companies within the Consumer Goods sector that declined today were: Enova Systems ( ENA), down 19.8%, Furniture Brands International ( FBN), down 11.4%, Hyster-Yale Materials Handling ( HY), down 10.9%, and Chromcraft Revington ( CRC), down 9.4%.
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Reynolds American Inc., through its subsidiaries, manufactures and sells cigarette and other tobacco products in the United States. Reynolds American has a market cap of $25 billion and is part of the tobacco industry. The company has a P/E ratio of 18.2, above the average tobacco industry P/E ratio of 17.5 and above the S&P 500 P/E ratio of 17.7. Shares are up 6.7% year to date as of the close of trading on Monday. Currently there is one analyst that rates Reynolds American a buy, one analyst rates it a sell, and nine rate it a hold.

TheStreet Ratings rates Reynolds American as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, notable return on equity, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the consumer goods sector could consider iShares Dow Jones US Cons Goods ( IYK) while those bearish on the consumer goods sector could consider ProShares Ultra Sht Consumer Goods ( SZK).

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