Though the bottom line has been getting reliably bigger, falling short of estimated earnings in two of the last three quarters doesn’t make Lorillard (NYSE:LO) a high-odds bet for its upcoming earnings announcement. The pros are looking for a profit of $2.32 per share, compared to $2.05 for the same quarter a year earlier. Not only is that 13% profit improvement a tall order, it’s made even taller in that it would be a record per-share profit. It feels like a recipe for disappointment.
Worse, net margins have been getting steadily smaller since 2007 … not a sign of bad luck or a poor economic environment, but just a sign of the times for tobacco companies.
Side note: If the e-cigarette ever does catch on, Lorillard’s fortune could change. The recent acquisition of the Blu Cigs company makes Lorillard the frontrunner of that race. Blu Cigs only did $30 million in sales last year, but that number is getting bigger, fast.