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Vector Group Combines Tobacco With Real Estate

By: Investor's Business Daily
Posted: 4/17/2014 5:58:00 PM
Referenced Stocks: VGR

Vector Group ( VGR ) makes and sells cigarettes, but it's also increasing its interest in the real estate business.

Last December, it paid $60 million in cash to up its ownership of Douglas Elliman Realty, which it says is New York's largest real estate brokerage, from 50% to 70.59%.

In a presentation in March, company executives told institutional investors 2013 was a transformational year for the company.

Besides upping its stake in Elliman, the company has settled with 4,900 plaintiffs in a class-action smoking lawsuit and has invested $75 million in real estate holdings.

It also introduced a new brand, Eagle 20s, which targets the deep discount market.

The company has a history in tobacco that goes back to 1873 with the founding of the Liggett brand. It owns the Liggett, Eve, Pyramid, USA and other brands. In 2013, 63% of its revenue came from tobacco, the rest from real estate.

It owns the Elliman real estate firm through its subsidiary, New Valley, which also owns interests in hotels, office buildings, condominiums and apartments.

No analyst tracked by Thompson Reuters follows the stock, so there are no earnings estimates.

In the most recent quarter, 177 mutual funds reported owning it and 20 are rated A+ or A in IBD's proprietary 36-Month Performance Rating, which would put them in the top 10% of all mutual funds.

Earnings in the past two years have risen 7% and 39%, but sales have declined 4% and 3%.

The five-year annualized EPS growth rate is -1%. It has a five-year Earnings Stability Factor of 12 on a 0 to 99 scale where low numbers correspond to stable earnings.

In 1995, it paid a quarterly dividend of 4.3851 cents per share. Since 2011, it's paid 40 cents a quarter. That works out to an annualized yield of 7.6%.