Reynolds American Reports Smokin' Profits; Altria's Earnings Slip

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Tobacco Companies Post Mixed 3Q Earnings [AP]

Summary: Altria Group, the leader of the tobacco industry and manufacturer of perennially popular Marlboros and Virginia Slims, saw its Q3 profits slide over disappointing sales in Spain and Japan. Reynolds American, however -- producer of Camels and Kools and Altria's biggest rival -- enjoyed a 45% jump in earnings over the period. Revenues increased for both companies and both were rewarded with a lift in share price. Altria reported EPS of $1.39 versus $1.37 last year, just shy of Street expectations of $1.41. Revenue went up 3.7% to $25.88 billion from $24.96 billion last year. Reynolds earned $309 million, or $1.05 per share, in the quarter, up from $2.13 million, or 72 cents per share, a year ago. Revenue ticked up to $2.19 billion from $2.15 billion last year. The company's results bested Street expectations of $1.02 EPS on $2.16 billion of sales. Profits were enhanced by improvements in market share and by a strong showing by Conwood, Reynolds's newly acquired smokeless tobacco business. In other news, an appeals court on Tuesday granted a temporary stay in a case accusing Altria, Reynolds American and other tobacco companies of deliberately misleading smokers about the safety of light cigarettes. The case, which exposes the industry to potential damages of approximately $200 billion, will be reviewed by a panel of judges. Also, Altria's board will meet in January to set in motion a long-anticipated divestiture of its 88.6% stake in Kraft Foods.
Related links: The Tobacco Empire Strikes Back • Kraft Spinoff Goes Up in Smoke • Altria Continues to Gain Altitude • Altria's Opportunity to Unlock Shareholder Value • Light Cigarette Suit Could Exact a Heavy Price on Tobacco Companies • R.J. Reynolds Tobacco Company to Appeal, Ask for Stay in "Lights" Case [Yahoo Finance]
Potentially impacted stocks and ETFs: Altria Group Inc. (MO), Reynolds American (RAI) • PowerShares Dynamic Market Portfolio (PWC), WisdomTree Dividend Top 100 (DTN)

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