Reynolds Hits 52-Wk High on Solid Q1 - Analyst Blog

Shares of  Reynolds American Inc. RAI hit a new 52-week high of $56.87 on May 8. The stock's share price has been rising ever since it reported solid first-quarter 2014 results on Apr 23.

 Its share price closed at $56.57on May 8, recording a healthy return of 14.8% year-to-date. The company's long-term estimated earnings per share growth rate is 2.9%. Average volume of shares traded over the last three months came in at approximately 2,957K.

Solid First-Quarter Performance

Although Reynold first quarter fiscal 2014 earnings per share missed estimates the company posted strong top-lines which increased 2.8% year over year on the back of market share gains by it premium brands. Sales inched past the Zacks Consensus Estimate by 2.1%.

Although volumes declined and tough industrial conditions prevailed, the company's flagship Camel and Pall Mall brands showed considerable strength and reported substantial market share gain during the quarter.

Market share of the company's popular smokeless brands Grizzly and Natural American Spirit also increased during the quarter. The company is on track with investment in smokeless and moist snuff products to meet the changing preferences of adult tobacco consumers. Furthermore, the company's advancement in the e-cigarette category with its brand Vuse is encouraging. The company has made heavy investments in the brand and plans to expand its distribution nationally in fiscal 2014.

Reynolds American maintained the fiscal 2014 guidance. The company expects earnings in the range of $3.30 to $3.45, up 3.5% to 8.2% from fiscal 2013 earnings of $3.19.

Other Stocks to Consider

Reynolds American has a Zacks Rank #3 (Hold). Another cigarette company stock worth considering is Philip Morris International Inc. PM with a Zacks Rank #2 (Buy). Other stocks in the consumer staples sector that are performing well at the current level include B&G Foods Inc. BGS and Mondelez International Inc. MDLZ carrying the same Zacks Rank as Philip Morris.