Reynolds American Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Reynolds American (NYSE:RAI) will unveil its latest earnings on Tuesday, October 23, 2012. Reynolds American manufactures cigarettes and other tobacco products in the United States.

Reynolds American Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 79 cents per share, a rise of 12.9% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 80 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 79 cents during the last month. Analysts are projecting profit to rise by 5.3% compared to last year’s $2.96.

Past Earnings Performance: The company topped estimates last quarter after missing forecasts the quarter prior. In the second quarter, it reported net income of 79 cents per share against a mean estimate of profit of 76 cents per share. In the first quarter, it missed forecasts by 2 cents.

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A Look Back: In the second quarter, profit rose 45.7% to $443 million (78 cents a share) from $304 million (52 cents a share) the year earlier, exceeding analyst expectations. Revenue fell 4% to $2.18 billion from $2.27 billion.

Stock Price Performance: Between August 21, 2012 and October 17, 2012, the stock price had fallen $2.67 (-5.8%), from $45.80 to $43.13. The stock price saw one of its best stretches over the last year between June 8, 2012 and June 20, 2012, when shares rose for nine straight days, increasing 5.5% (+$2.28) over that span. It saw one of its worst periods between October 4, 2012 and October 12, 2012 when shares fell for seven straight days, dropping 5.2% (-$2.29) over that span.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 0.78 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, a ratio less than one could indicate a company may have difficulty meeting current obligations.

Key Stats:

On the top line, the company is hoping to use this earnings announcement to snap a string of two-straight quarters of revenue declines. Revenue fell 2.9% in the first quarter and dropped again in the second quarter.

Analyst Ratings: There are mostly holds on the stock with nine of 11 analysts surveyed giving that rating.

Wall St. Revenue Expectations: On average, analysts predict $2.2 billion in revenue this quarter, no change from the year-ago quarter. Analysts are forecasting total revenue of $8.43 billion for the year, a decline of 1.3% from last year’s revenue of $8.54 billion.

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

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