Lorillard Earnings Miss, But Sales, Shares Light Up

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Lorillard ( LO ) missed profit views for a second straight quarter last week, but sales topped forecasts amid rising market share of its Newport and blu eCigs brands.

The Greensboro, N.C.-based tobacco maker on Thursday reported a Q1 profit of 69 cents a share, up 5% from the prior year but 3 cents below forecasts. Revenue climbed 1% to almost $1.6 billion to top views, helped by a 1.4% increase in net cigarette sales.

During the quarter, Lorillard's domestic retail market share rose 0.3 points to 15.2%, the first time above the 15% level. Its blu e-cigarette market share grew 10 points to 45% in the U.S. The company is gearing up to launch blu eCigs in the U.K.


The rising popularity of electronic cigarettes, however, has drawn increased scrutiny from regulators. Also on Thursday, the Food and Drug Administration proposed rules that would make products subject to federal review, prohibit sales to minors and require labels warning of nicotine addiction.

But TV ads and flavored versions wouldn't be affected. Consumer groups have alleged the e-cig makers target youth with provocative ads that play up the "cool" factor and flavors such as chocolate, gummy bear and pumpkin spice. Celebrities have also been shown "vaping" in movies, photographs and other forms of marketing.

Lorillard on March 10 announced a quarterly dividend hike of 12% to 61.5 cents a share. That works out to an annualized yield of 4.5%, well above the S&P 500's 1.9%.

Annual earnings per share have steadily grown the past five years, and analysts expect an 11% gain this year and 9% the next. That consistent track record helps it land a three-year earnings stability factor of 1 on a scale of 0 (most stable) to 99 (most volatile).

The stock cleared a 53.37 buy point of a flat base on March 3, then spiked as much as 7% the next session before starting a cup base with a potential 56.95 buy point.



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



This article appears in: Investing , Investing Ideas

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