Reynolds American Third Quarter Earnings

Reynolds American (NYSE:RAI) announced its results for the most recent quarter on October 23, 2012. Reynolds American manufactures cigarettes and other tobacco products in the United States.

Earnings season is important to investors because it shows how much profit is left in the company's hand after deducting costs from revenue. SEE: Can Earnings Guidance Accurately Predict The Future?

The Numbers: Reynolds American posted an EPS above analyst expectations, despite revenues falling short of predictions. The company reported adjusted net income of 79 cents per share versus the 76 cents per share estimate and revenues of $2.12 billion versus the $2.25 billion estimate. Revenue fell 3.8% from the same period last year. Last quarter marks the third in a row in which the company has seen falling revenue on a year-over-year basis. Reynolds American's profit rose 6.6% from last year's figures to $420 million during the third quarter.



Management Quote: "RAI increased both earnings and margin in the third quarter as its operating companies continued to make good progress in a weak economy and a highly competitive environment," said Daniel M. Delen, president and chief executive officer. "RJR Tobacco, American Snuff and Santa Fe remained focused on building the equity of their key brands, while investing in innovations for sustainable growth in an evolving marketplace."



Looking Ahead: For next quarter, analysts have a more positive outlook about the company's expected results. The average estimate for the fourth quarter is 80 cents per share, up from 79 cents 90 days ago. When analyst increase earnings estimates investors can assume business has been stronger than first thought and is an encouraging sign for investors. The average estimate for the fiscal year is $2.95 per share, up from $2.94 seven days ago.