Lorillard Inc. Earnings: Rising Revenue Helps Margins Expand, Profit Rises

S&P 500 (NYSE:SPY) component Lorillard Inc. (NYSE:LO) reported net income above Wall Street’s expectations for the fourth quarter. Lorillard manufactures and sells cigarettes and tobacco under the brand names of Newport, Kent, True, Maverick, and Old Gold.

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Lorillard Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Lorillard Inc. rose to $310 million ($2.32 per share) vs. $259 million ($1.74 per share) in the same quarter a year earlier. This marks a rise of 19.7% from the year earlier quarter.

Revenue: Rose 8.9% to $1.62 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Lorillard Inc. reported adjusted net income of $2.20 per share. By that measure, the company beat the mean estimate of $1.96 per share. It beat the average revenue estimate of $1.08 billion.

Quoting Management: “Lorillard had an outstanding fourth quarter which helped the Company once again post record sales and profit for the full year of 2011. Fourth quarter gains in market share, pricing realization and margins resulting from the Company’s strategic initiatives implemented during 2011 all contributed to the strong quarter and year,” said Murray S. Kessler, Chairman, CEO & President. “Importantly, the Company remains bullish on 2012 and its ability to continue to deliver industry leading fundamentals and therefore increased its dividend by 19%.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 3.5% to $1.62 billion in the third quarter. The figure rose 11.3% in the second quarter from the year earlier and climbed 12.9% in the first quarter from the year-ago quarter.

The company topped expectations last quarter after falling short of forecasts in the third quarter with net income of $1.94 versus a mean estimate of net income of $2.04 per share.

Margins rose in the third quarter after falling the quarter before. Gross margin rose 3.2 percentage points to 39.4% from the quarter earlier quarter. In the second quarter, the figure rose 1.4 percentage points to 34.7% from the year earlier quarter.

Net income has increased 8.3% year over year on average across the last five quarters. The biggest gain came in the most recent quarter, when income climbed 19.7% from the year earlier quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next quarter performance. Over the past month, the average estimate for the first quarter of the next fiscal year has gone up from $1.93 per share to $1.94. The average estimate for the fiscal year has remained at $7.65 per share.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com