Reynolds American Earnings: Profit Rises for Second Straight Quarter

Falling revenue did not prevent S&P 500 (NYSE:SPY) component Reynolds American Inc. (NYSE:RAI) from reporting a profit boost in the third quarter. Reynolds American manufactures cigarettes and other tobacco products in the United States.

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Reynolds American Inc. Earnings Cheat Sheet

Results: Net income for Reynolds American Inc. rose to $420 million (74 cents per share) vs. $394 million (67 cents per share) in the same quarter a year earlier. This marks a rise of 6.6% from the year-earlier quarter.

Revenue: Fell 3.8% to $2.12 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Reynolds American Inc. reported adjusted net income of 79 cents per share. By that measure, the company beat the mean estimate of 76 cents per share. It fell short of the average revenue estimate of $2.25 billion.

Quoting Management: “RAI increased both earnings and margin in the third quarter as its operating companies continued to make good progress in a weak economy and a highly competitive environment,” said Daniel M. Delen, president and chief executive officer. “RJR Tobacco, American Snuff and Santa Fe remained focused on building the equity of their key brands, while investing in innovations for sustainable growth in an evolving marketplace.”

Key Stats:

Revenue has dropped for three consecutive quarters. In the second quarter, revenue declined 4% to $2.18 billion while the figure fell 2.9% in the first quarter from the year earlier.

The company topped expectations last quarter after falling short of forecasts in the second quarter with net income of 63 cents versus a mean estimate of net income of 65 cents per share.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 79 cents a share to 80 cents over the last seven days. At $2.95 per share, the average estimate for the fiscal year has risen over the past seven days from $2.94.

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

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