Lorillard Inc. (LO): Today's Featured Tobacco 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.

Lorillard ( LO) pushed the Tobacco industry lower today making it today's featured Tobacco laggard. The industry as a whole closed the day down 2.1%. By the end of trading, Lorillard fell $4.08 (-3.5%) to $111.70 on heavy volume. Throughout the day, 3.1 million shares of Lorillard exchanged hands as compared to its average daily volume of 1.1 million shares. The stock ranged in price between $110.10-$113.08 after having opened the day at $110.56 as compared to the previous trading day's close of $115.78. Another company within the Tobacco industry that decreased today was Star Scientific ( STSI), down 10.7%.
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Lorillard, Inc., through its subsidiaries, manufactures and sells cigarettes in the United States. It markets approximately 43 product offerings in various brand names, including Newport, Kent, True, Maverick, and Old Gold. Lorillard has a market cap of $15.36 billion and is part of the consumer goods sector. The company has a P/E ratio of 14.7, above the average tobacco industry P/E ratio of 14.5 and below the S&P 500 P/E ratio of 17.7. Shares are up 3.2% year to date as of the close of trading on Tuesday. Currently there are five analysts that rate Lorillard a buy, no analysts rate it a sell, and five rate it a hold.

TheStreet Ratings rates Lorillard as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in stock price during the past year and expanding profit margins. 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 tobacco industry could consider PowerShares Dynamic Food & Beverage ( PBJ) while those bearish on the tobacco industry could consider PowerShares DB Agriculture Sht ETN ( ADZ).

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