Reynolds American Earnings: The Profit Streak Smoking Forward

Falling revenue did not prevent S&P 500 (NYSE:SPY) component Reynolds American Inc. (NYSE:RAI) from reporting a profit boost in the second 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 $443 million (78 cents per share) vs. $327 million (56 cents per share) in the same quarter a year earlier. This marks a rise of 35.5% from the year-earlier quarter.

Revenue: Fell 4% to $2.18 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 earnings and margin in the second quarter as our operating companies successfully navigated an intensely competitive environment,” said Daniel M. Delen, president and chief executive officer. “This performance rounded out a solid first half, and keeps us on track for full-year earnings growth in the mid- to high-single digits.”

Key Stats:

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

Revenue has dropped in the past two quarters. In the first quarter, revenue declined 2.9% to $1.93 billion from the year-earlier quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the third 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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