Reynolds (RAI) Stock Rising After Being Reinstated at Goldman

NEW YORK (TheStreet) -- Shares of Reynolds American  (RAI) were rising, higher by 0.95% to $73.29 in late morning trading on Tuesday, after the company had coverage reinstated with a "buy" rating by analysts at Goldman Sachs this morning.

The firm added Reynolds American to its "Conviction Buy List" with an $81 price target.

Goldman said the tobacco producer has a "best-in-class" brand portfolio following its acquisition of Lorillard  (LO).

Winston Salem, N.C.-based Reynolds American operates through three segments including RJR Tobacco, American Snuff and Santa Fe. 

Separately, TheStreet Ratings team rates REYNOLDS AMERICAN INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate REYNOLDS AMERICAN INC (RAI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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 analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 23.1%. 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. In addition, REYNOLDS AMERICAN INC has also vastly surpassed the industry average cash flow growth rate of -31.97%.
  • 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.
  • You can view the full analysis from the report here: RAI Ratings Report

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