Reynolds American (RAI) Off To A Strong Start In Pre-Market Activity

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Reynolds American ( RAI) as a pre-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Reynolds American as such a stock due to the following factors:

  • RAI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $210.6 million.
  • RAI traded 16,594 shares today in the pre-market hours as of 9:29 AM.
  • RAI is up 2.5% today from yesterday's close.

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More details on RAI:

Reynolds American Inc., through its subsidiaries, manufactures and sells cigarettes and other tobacco products in the United States. It operates through RJR Tobacco, American Snuff, and Santa Fe segments. The stock currently has a dividend yield of 3.6%. RAI has a PE ratio of 27. Currently there are 4 analysts that rate Reynolds American a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Reynolds American has been 3.1 million shares per day over the past 30 days. Reynolds American has a market cap of $39.9 billion and is part of the consumer goods sector and tobacco industry. The stock has a beta of 0.79 and a short float of 5% with 6.76 days to cover. Shares are up 16.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Reynolds American as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, increase in net income, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 23.2%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Tobacco industry and the overall market, REYNOLDS AMERICAN INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Tobacco industry. The net income increased by 7.2% when compared to the same quarter one year prior, going from $363.00 million to $389.00 million.
  • Net operating cash flow has increased to $1,080.00 million or 18.42% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -30.89%.
  • The gross profit margin for REYNOLDS AMERICAN INC is rather high; currently it is at 59.89%. 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 18.91% trails the industry average.

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