Reynolds American Second Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Reynolds American (NYSE:RAI) will unveil its latest earnings on Tuesday, July 24, 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 76 cents per share, a rise of 13.4% 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 78 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 77 cents during the last month. Analysts are projecting profit to rise by 5% compared to last year’s $2.95.

Past Earnings Performance: Last quarter, the company fell short of estimates by 3 cents, coming in at net income of 63 cents per share against a mean estimate of profit of 65 cents. The company topped expectations in the fourth quarter of the last fiscal year.

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A Look Back: In the first quarter, profit fell 23.5% to $270 million (47 cents a share) from $353 million (60 cents a share) the year earlier, missing analyst expectations. Revenue fell 2.9% to $1.93 billion from $1.99 billion.

Stock Price Performance: Between May 21, 2012 and July 18, 2012, the stock price had risen $5.46 (13.3%), from $41.09 to $46.55. 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 May 29, 2012 and June 5, 2012 when shares fell for six straight days, dropping 4.2% (-$1.78) over that span.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 0.97 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. The company regressed in this liquidity measure from 1.01 in the fourth quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 14.6% to $4.9 billion while assets rose 9.9% to $4.73 billion.

Key Stats:

Heading into this earnings announcement, net income has dropped 3.6% on average for the last four quarters.

On the top line, the company is looking to rebound after a revenue drop last quarter. Revenue rose 0.1% in the the fourth quarter of the last fiscal year after dropping in the first quarter.

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

Wall St. Revenue Expectations: Analysts are projecting a decline of 0.9% in revenue from the year-earlier quarter to $2.25 billion.

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

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