QUOTE AND NEWS
Wall Street Journal  Mar 13  Comment 
Antitrust enforcers are asking detailed questions about business plans and leadership of a U.K. company that plays a key role in Reynolds’s proposed $25 billion acquisition of Lorillard.
Market Intelligence Center  Mar 11  Comment 
With bullish technical indicators and a 3 STARS (out of 5) hold ranking from Standard & Poor’s, Lorillard Inc (LO) could be an attractive play for investors according to MarketIntelligenceCenter.com's patented option-trade picking algorithms. A...
Reuters  Feb 26  Comment 
* Martin Orlowsky has voluntarily resigned due to differences with company's management style
TheStreet.com  Feb 19  Comment 
NEW YORK (TheStreet) -- Lorillard shares closed trading down $1.14% to $67.86 on Thursday after the company announced that its board approved a dividend increase about 90 minutes before the closing bell today. The Greensboro, NC-based tobacco...
Jutia Group  Feb 19  Comment 
[PR Newswire] - "We are very pleased to continue our policy of periodically increasing our dividend in line with our earnings growth. This dividend increase is consistent with our targeted dividend payout ratio of 70-75 percent of earnings as well...
Motley Fool  Feb 11  Comment 
As the tobacco giant waits to see if its merger with Reynolds American will go through, Lorillard delivered solid results.
Wall Street Journal  Feb 11  Comment 
Lorillard, awaiting approval for its merger with Reynolds American, posted sales growth in its fourth quarter as higher pricing offset lower cigarette volume.
Jutia Group  Feb 11  Comment 
[PR Newswire] - GREENSBORO, N.C., Feb. 11, 2015 /PRNewswire/ -- Lorillard, Inc. (NYSE: LO) announced today its results for the quarter and year ended December 31, 2014. Fourth Quarter and Full Year Record Highlights Fourth ... Read more on this. ...




RELATED WIKI ARTICLES
 
TOP CONTRIBUTORS

Lorillard is the 3rd largest tobacco company in the US. Its menthol brand, Newport, gives LO 94% of its revenue, 92% of its volumes, 34% share of all menthol cigarette sales in the US, as well as an overall domestic tobacco market share of 10%. The Greensboro–based company, which also produces the Kent and True brands, is managed by CEO Martin Orlowsky. Orlowsky has been at LO for 20 years. On June 10, 2008, LO was spun off from former parent Loews Group. Previously, Loews floated Lorillard as a tracking stock wherein Lorillard generated cash for the parent’s sake.

Trends and Forces

Economically independent industry

Lorillard participates in an economically independent industry and returns over the long term are not predicated on the overall economic conditions of the US. The cigarette industry is protected by regulatory moats, as well as scale economies and brand loyalty. Brand power is an empty CEO speak if it does not translate into pricing power, and historically, tobacco manufacturers have been able to raise prices faster than volumes have fallen. A pack of cigarettes costs 25 cents to make the fact that it can be sold for 20x that amount is a testament to the robust business fundamentals underlying the industry. 5.5 trillion cigarettes were consumed last year, of which 27-28% belonged to the menthol category. LO, which boosted its market share for the seventeenth straight year in 2007, is the de facto play on menthol, which has enjoyed less detrimental volume trends than the rest of the tobacco group: Newport leads the category in terms of customer retention and margins. According to Merrill Lynch, 1000 sticks of Newport is generating a profit of more than $36 dollars vs. $28 per 1000 sticks at Altria/PMUSA.

Competition

Number 2 player REYNOLDS AMERICAN (RAI) (28% domestic share w/ its menthol brands – most notably Kool and Salem -- accounting for 24% of menthol category) has felt the pangs of lower demand/higher prices more than its rivals. While there is room for margin expansion (25% right now at RAI vs. 30% at LO and MO) at RAI, its drastic volume declines at twice the industry clip are keeping us on the sidelines at the moment. Even after its 2004 merger with Brown/Williamson, its overall US share has shrunk. While its top 3 brands are gaining share, it not stopped the bleeding enough to buoy investor sentiment. Non-premium brands at Reynolds have seen little to no ad spend support, making share erosion a self infliction story that’s made investors nervous. And like LO, RAI offers investors little in the way of international exposure; the lack of near term catalysts, other than its investments in smokeless tobacco (10% of sales), which we feel the Street has already discounted, underscores our lukewarm feeling on the stock.

Altria Group (MO), the 800 pound gorilla ($44.2B market cap) hold 50% of the retail market and its Marlboro brand accounts for 40% of all cigarettes sold. Precisely because it is so big, MO will have to find innovative ways to grow, either by category extensions or improved marketing. As a result, profitability in the near term could suffer slightly, which could explain why the bellwether is 17% off its highs. Altria throws off $3B/year in free cash flow, and that leg of the story hasn’t’ been impaired. The firm is now run by CEO Mike Szymanczyk, whose marketing heavy background resonates with the company’s strategic direction in the coming decade. That said, LO is our favorite pick in the group since it has a better volume story than MO and a better margin profile than RAI.

Retail Share for Top thee Menthol Brands: Jan-Apr 2008) Jan Feb March April
Newport 8.3%8.5% 8.6% 8.6%
Marlboro Menthol 5.0%5.3% 5.5% 5.5%
Kool 3.1%3.1% 3.0% 3.0%
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki