Lorillard Disappoints With 4% EPS Gain


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Cigarette manufacturerLorillard ( LO ) Wednesday got smoked by a poor earnings report.

The Greensboro, N.C. company reported 82 cents a share, a meager 4% increase in adjusted earnings for the fourth quarter. Analysts were looking for 86 cents. Sales inched up 2% to $1.74 billion as higher cigarette prices helped offset a drop in volumes.

For the quarter, unit volume fell 1.6% from the year-ago period in the U.S., Puerto Rico and U.S. territories. Lorillard said it estimates domestic shipments slid 6.2% in Q4.

But the company noted that it increased its market share for the 11th year in a row, to 14.9%, thanks largely to its Newport brand.

Its blu eCigs e-cigarette brand, the company added, continues to establish itself as the category leader, winning 48% market share in the quarter and 47% for the full year.

The stock fell 2.48 to close at 47.47, a nearly 5% drop. Volume was 289% above average. The stock finished off its low of the day and found support at its 200-day moving average.

Lorillard is the world's third largest tobacco company and the oldest in continuous operation, having been founded in 1760. Newport is its flagship brand. It also makes Kent, True, Maverick and Old Gold.

It acquired blu eCigs in 2012.

Despite the stumble, Lorillard has a five-year annualized growth rate of 13% and an Earnings Stability Factor of 2 on a 0 to 99 scale, where low numbers correspond to stable earnings growth.

Its dividend is 55 cents a quarter, which translates to $2.20 a year for an annualized yield of about 4.5% at the current stock price.

The dividend is up from 92 cents in 2008.

Analysts are looking for a 15% EPS gain in the next report and 15% overall growth in 2014.

They're looking for 11% growth in 2015.

Despite the stigma that's been attached to smoking over past decades, Lorillard is trading only 10% off an all-time high.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Investing Ideas
Referenced Stocks: LO

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