Reynolds American (RAI) has a market cap of $68.9 billion. It rose 2.5% to close at $55.10 per share on October 24, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 16.6%, 13.4%, and 22.5%, respectively, on the same day. RAI is trading 16.3% above its 20-day moving average, 13.7% above its 50-day moving average, and 12.3% above its 200-day moving average.
Related ETF and peers
The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests 2.6% of its holdings in Reynolds American. The ETF tracks an equal-weighted index of large-cap US consumer staples stocks drawn from the S&P 500. The YTD price movement of RHS was 4.3% on October 24.
The market caps of Reynolds’ competitors are as follows:
Reynolds American’s rating
On October 24, 2016, CLSA downgraded Reynolds American’s rating to “underperform” from “outperform.”
Performance of Reynolds American in fiscal 3Q16
Reynolds American reported 3Q16 net sales of $3.20 billion, a rise of 1.4% over the net sales of $3.16 billion in 3Q15. Sales of the RJR Tobacco, Santa Fe, and American Snuff segments rose 0.80%, 21.6%, and 11.4%, respectively, between 3Q15 and 3Q16. The company’s cost of products sold as a percentage of net sales fell 730 basis points, and its operating margin rose 940 basis points.
Its net income and EPS (earnings per share) rose to $861.0 million and $0.60, respectively, in 3Q16, compared with $657 million and $0.46, respectively, in 3Q15. The company reported adjusted EPS of $0.61 in 3Q16, a rise of 10.9% over 3Q15. Reynolds American’s cash and cash equivalents fell 26.1% between 4Q15 and 3Q16. Its debt-to-equity ratio fell to 1.4x in 3Q16 compared with 1.9x in 4Q15.
The company has projected adjusted EPS in the range of $2.27 to $2.33 for fiscal 2016. The company has repurchased $75 million of its common stock under its share repurchase program.
Next, we’ll look at WABCO Holdings (WBC).