Reynolds American Inc.
) is set to report its 2013-first quarter results on April 23. In
the last reported quarter, the company posted a 2.6% positive
surprise. Let's see how things are shaping up for this
Growth Factors This Past Quarter
Reynolds benefited from improved pricing and volume gains for
moist snuff products that offset declines in cigarette volumes
and marketing expenses.
Revenues slipped marginally from the year-ago quarter mainly
due to declining cigarette shipment volumes. Governmental actions
and anti smoking campaigns have led to the decline in shipment
volumes. Moreover, higher excise taxes and increasing popularity
of other tobacco products led to the decline. However, the
American Snuff and Santa Fe segment reported positive results on
the back of innovations and positive pricing during the
Our proven model does not conclusively show that Reynolds
American is likely to beat earnings this quarter. That is because
a stock needs to have both a positive Zacks Earnings Expected
Surprise Prediction (ESP) and a Zacks Rank of #1, 2 or 3 for this
to happen (Read:
Zacks Earnings ESP: A Better Method
). That is not the case here as you will see below.
The Most Accurate estimate and the Zacks Consensus Estimate
stands at 69 cents. That is a difference of 0.00%.
Zacks Rank #3 (Hold):
Reynolds'Zacks Rank #3 (Hold) lowers the predictive power of ESP
because the Zacks Rank #3 when combined with a non positive ESP
makes surprise prediction difficult. We caution against stocks
with Zacks Rank #4 and #5 (Sell rated stocks) going into the
earnings announcement, especially when the company is seeing
negative estimate revisions momentum.
Other Stocks to Consider
), Earnings ESP of +4.88% and a Zacks Rank #1 (Strong Buy)
Kraft Foods Group, Inc.
), Earnings ESP of +3.13% and a Zacks Rank #2 (Buy)
), Earnings ESP of +100.00% and a Zacks Rank #3 (Hold)
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