Tobacco company, Reynolds American, Inc.(RAI) reported a drop in Q4 earnings, but beat analysts estimates on Tuesday.

The Winston-Salem, NC based company reported fourth quarter net income of $139 million, or 25 cents per share, down -54% from last years earnings of $304 million, or 52 cents per share. Excluding special items, earnings were 76 cents per share, beating analysts estimate of 73 cents per share.

Revenue for the quarter dropped to $2.08 billion, but beat analysts estimate of $2.06 billion.

RAI saw a decline in cigarette sales of -3%, compared with the average -1% industry decline.

For 2012, the company saw earnings of $1.27 billion, or $2.24 per share, down from $1.41 billion, or $2.40 per share in 2011. Excluding special items, 2012 income was $1.69 billion, or $2.97 per share, up from $1.65 billion, or $2.81 per share in 2011. Analysts expected to see earnings of $2.95 per share.

Revenue for the year dropped by -2.8% to $8.3 billion, missing analysts estimate of $8.31 billion.

The company expects to see FY2013 earnings in the range of $3.15 to $3.30 per share. Analysts expect to see earnings of $3.12 per share.

Reynolds American shares were down 82 cents, or -1.85% during premarket trading Tuesday. The stock has increased 11% in the past year.

The Bottom Line
Shares of Reynolds American, Inc.(RAI) have a 5.34% yield, based on Monday’s closing price of $44.22.

Reynolds American, Inc.(RAI) is a “Recommended” dividend stock at this time, holding a Dividend.com DARS™ Rating of 3.5 out of 5 stars.

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