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Reynolds American Inc. (NYSE: RAI) – Is this large market cap stock undervalued?

Reynolds American Inc. (NYSE: RAI), is firmly in the large market cap category with market cap of 68312.49. To be considered a large market cap stock companies have to be valued at more than $10 billion. The current price for Reynolds American Inc. is 47.86 (with a change from open of -0.54%), this in conjunction with a target price of 55.27. Volume today has so far reached 3133900, with an average volume of about 4280.99. The GAP for this stock, is 0.48%.

The P/E ratio is 12.93, bringing the forward P/E to a value of 18.59. The current EPS for Reynolds American Inc., is 3.7, with a EPS growth for this year coming to a value of 90.00%. Performance has been interesting with performance year to date coming to 6.39%.

Looking further into the growth statistics for Reynolds American Inc., EPS is looking like it will grow 10.95% in the next year. Looking even further it is projected to be 11.93%. Quarter over quarter is -67.10% for EPS growth and for sales growth quarter over quarter it is 33.00%. Looking at past EPS growth statistics we see that for the past five years it has been 17.60%. Sales growth for the past five years has in fact been 4.50%.

Looking at the ownership, we see that the insider ownership is at 0.10% and institutional ownership is 47.80%. Shares outstanding is 1427.34, while shares float is at a value of 824.15. Float short for Reynolds American Inc. is 1.59% and the short ratio is 3.06.

In terms of debt, long term debt/equity is 0.62, while the total debt/equity comes to 0.64. The ability to meet these debts, means that the current ratio is 1, and the quick ratio is 0.7. The most recent gross margin is 57.90% and their operating margin is 76.70%. The profit margin is 43.00%.

Reynolds American Inc. has seen returns on assets of 9.90%, and on investment, 10.70%. Return on equity is 26.70%. Price/Earnings to growth ratio is 1.08. Price/Sales ratio is at a value of 5.54, with Price/book ratio coming to 3.19 and Price/cash is 35.14, and finally Price/Free cash Flow is *TBA.

The simple moving averages are -3.09% and -1.98% for 20 day and 200 day simple moving average respectively. For the 52 week high and low the 52 week high is -11.35% and the 52 week low is 15.50%.

Reynolds American Inc. has a dividend yield of 3.84%, with a current price of 47.86. The ability to pay this means the payout ratio is 42.00%. This is in an industry, Cigarettes, with equally high dividends from other companies in this sector, which it is Consumer Goods. Reynolds American Inc. is based in USA.

Performance in the Cigarettes industry means that Reynolds American Inc. has seen performance for the past week of -1.20%, with performance for the month coming to -3.44%. Looking at the data for the quarter it is at a value of -8.68%, and for the half year the performance is 13.85%. Volatility for this week is 1.26% and for the month this is 1.63%.

Disclaimer: Remember there is a risk to your investment, this is not a recommendation, nor personal advice, never invest more than you are able too loose.

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Tony Dabbs

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