In perusing this thread, I noted that there were several comments on other tobacco companies. However, very little was included on Reynolds Nabisco (RN), despite its significant US market share of 27%.
I have reviewed several prominent tobacco stocks (AMB, MO, RN, UST, LTR and BTI), and noted two interesting points for RN relative to its peers. First, Reynolds is the closest to its 52 week low of all these stocks, suggesting that RN has not participated in the slight rebounds from 52 week lows other tobaccos have experienced. Second, RN is paying the greatest dividend of the bunch at 7.12%. the remainder are:
AMB - 4.73%; MO - 4.8%; UST - 4.91%; LTR - 1.3%; BTI - 6.35%.
On the plus side, it appears that Reynolds is well-diversified with tobacco accounting for slightly less than 50% of its sales, though it contributes 65% of profits. Increased shareholder pressure may result in a spin-off of Nabisco within a year or two, potentially maximizing combined shareholder value. Also, RN is undergoing a restructuring, which was announced 6/24/96.
On the negative side, RN has significant debt and a large driver of its earnings growth is tied with an expected reduction in interest expense.
Does anyone have any comments, insights, etc. on RN to assist me in judging its potential? |
