Reynolds American by BidnessEtc

Reynolds American - BidnessEtc

Reynolds American Inc. (RAI) is the second largest Tobacco Company in the United States. Some of the famous Brands that come under the Name include Camel and Pall Mall, which are amongst the top selling cigarettes in the US. Under Reynolds come its subsidiaries that include American Snuff Company, Santa Fe Natural Tobacco Company, Niconovum USA Inc., and R.J. Reynolds Vapor Company.

Reynolds Tobacco is also a subsidiary of Reynolds American Inc and the parent company Of American Snuff Company, Niconovum USA Inc., Santa Fe Natural Tobacco Company. It holds a market share of 27% of US cigarette sales.

RAI recently announced that it might buy the Cigarette giant Lorillard. It might bid the giant for $20 billion. Reynolds American revenues increased 1% (YoY) due to higher average selling prices but cigarette sales have fallen sharply as health conscious consumers prefer electronic cigarette these days.

Reynolds American stocks are trading at $53.58 as of 25 March. The share price according to analysts is expected to reach a consensus estimate of $52 in the upcoming 12 months. Majority of the Analysts rate the company’s stock as a hold. For the last 3 years, the company has shown a growth in EPS.  

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Reynolds American Inc. (RAI)

Reynolds American, Inc - BidnessEtc

Reynolds American Inc. (RAI) is the second largest tobacco producing company in United States after Altria Group Inc.; its subsidiaries include R.J. Reynolds Tobacco Company, American Snuff Company, Niconovum AB and Santa Fe Natural Tobacco Company. Reynolds American Inc. control around 30% of all cigarettes sold within US. Some of its products like Camel, Pall Mall and Grizzly have continued to capture market share and exhibited tremendous growth momentum in FY2013 and are well on the track to achieve the ultimate goal of market leadership. Reynolds American Inc. has hired Lazard Ltd, as their advisors, to look for a possible deal to acquire the third largest cigarette making company Lorillard Inc. in US. If the deal materializes, it would change the market dynamics and would provide immense growth opportunities to Reynolds American Inc. and would be in a position to pose a threat to Altria Group Inc.

The stock price has seen a phenomenal rise of 20% since last April. The full year EPS rose by 40.2% to $3.14. This upbeat has been as a result of announcement of positive financial results of FY13. Despite the total consumption of cigarettes from 633 billion in 1982 has come down to 286 billion in 2012, the corporation has been successful in increasing its net income by 35.1% in FY13. The rise in profits has been backed by higher cigarette pricing and lower MSA expenses. Since the news of Lorillard Inc. acquisition and impressive annual financial results the company has acquired the attention of investors, the volume of shares traded has significantly increased. The company’s huge liquidity reserves outline strong company position to step into different ventures. Its subsidiary Santa Fe Natural Tobacco Company Inc. has been recently awarded Steward Status by the N.C. Department of Environment and Natural Resources (DENR), it explicitly portrays company’s exemplary environmental performance. Reynolds American Inc. has also taken a number of measures to scale down its electricity usage to help improve the environment.

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