Lorillard Inc. Stock Buy Recommendation Reiterated (LO)

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.

NEW YORK ( TheStreet) -- Lorillard (NYSE: LO) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:
  • LO's revenue growth has slightly outpaced the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 4.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • LORILLARD INC has improved earnings per share by 11.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LORILLARD INC increased its bottom line by earning $2.67 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.67).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Tobacco industry average. The net income increased by 6.0% when compared to the same quarter one year prior, going from $267.00 million to $283.00 million.
  • Net operating cash flow has increased to $578.00 million or 34.73% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.39%.
  • The gross profit margin for LORILLARD INC is rather high; currently it is at 52.70%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 24.31% trails the industry average.

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 $15.35 billion and is part of the consumer goods sector and tobacco industry. The company has a P/E ratio of 14.4, below the S&P 500 P/E ratio of 17.7. Shares are up 1.6% year to date as of the close of trading on Monday.

You can view the full Lorillard Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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