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Company name Lorillard Inc.
Stock ticker LO
Live stock price [stckqut]LO[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Poor
EPS growth Fair
P/E growth Poor
EBIT growth Poor

ANALYSIS

Confident Investor Rating Poor
Target stock price (TWCA growth scenario) $37.63
Target stock price (averages with growth) $43.66
Target stock price (averages with no growth) $36.72
Target stock price (manual assumptions) $45.08

The following company description is from Google Finance: http://www.google.com/finance?q=lo

Lorillard, Inc. (Lorillard) is the manufacturer of cigarettes in the United States. Its Newport is a menthol flavored premium cigarette brand. During the year ended December 31, 2011, the Newport brand accounted for approximately 88.4% of its sales revenue. In addition to the Newport brand, its product line has four additional brand families marketed under the Kent, True, Maverick and Old Gold brand names. These five brands include 43 different product offerings. During 2011, it shipped 40.7 billion cigarettes, all of which were sold in the United States and certain the United States possessions and territories. Lorillard produces cigarettes for both the premium and discount segments of the domestic cigarette market. It sells its products primarily to wholesale distributors, who in turn service retail outlets, chain store organizations, and government agencies, including the United States Armed Forces. In April 2012, it acquired all of the assets of blu ecigs.

 

Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock. Many people will also choose to not invest in this stock due to the products that the company manufacturers. As I have explained before, this is a reasonable reason to avoid a company.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.
[s2If current_user_can(s2member_level1)]
In order to assist you in using the techniques of this book, the values that I used when calculating the Manual pricing above were:

Stock price at the time of the calculation: $44.92

Growth: 0.1

Current EPS (TTM): $3.22

P/E: 14

Future EPS Calc: $5.18

Future Stock Price Calc: $72.6

Target stock price: $45.08

I hope that this makes you a better investor. [/s2If]

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It is an unfortunate reality for workers of the 21st century that life is different from their parents. Your parents were undoubtedly hard workers and worried about their future, so I do not want to dismiss their efforts. However, for many workers today, planning for retirement requires more work than our parents put into the subject.

I am likely to make a few generalizations in this document. Your individual situation may vary, but in general, the young workers of the 1960s and 1970s had a few benefits that are not enjoyed today.

  • Many companies then had pensions. Today, few companies have pensions and only offer 401K savings plans that are moderately contributed to by the employer
  • Social Security was a fairly safe security net. The workers of the 60s and 70s had the population numbers working for them so Social Security was going to be funded for much of their lives. The prudent worker of 30 years ago realized Social Security would not cover 100% of future living expenses, but there was little fear of it being defunded.
  • Life expectancy was not as long. It was fairly uncommon to have a relative past 80 and definitely 90 years of age – the norm was closer to mid-70s. Therefore, financial planning really only need to cover until about 75-80 years of age. Now, many people know 90 year old relatives or friends that are incredibly active. The assumption is that you will live to be 90.

Life today is different. Today we rarely have pensions from our employers. Social Security is not a sure bet that it has a viable future. In addition, we are living longer.

I don’t want to seem like life was better in the past than it is today. I’m actually fairly optimistic about the prospects of living in the second decade of the 21st century. I believe that we have more opportunities today than our predecessors. I also believe that we live more comfortably than previous generations of Americans.

Unfortunately, we do need to spend more time worrying about our financial future than our parents ever had to do. This concern and planning is not a big drag on our lives, but it is an important element of living in today’s economy.

This is why I wrote my book “The Confident Investor.” Today’s workers need to focus on developing the portfolio of investments that will allow them to live comfortably until they are 90-100 years old. You cannot expect Social Security or your employers pension to keep you comfortable after you stop working.

Building a portfolio that will make you financially comfortable is not extremely difficult. It does require some effort on your part. It’s also requires you to pre-plan how you spend and save your money. It is critical that you are not like the ostrich that hides its head in the sand, but instead plans ahead for retirement when you are not working.

A worker in today’s economy needs to save diligently and invest aggressively so that you can retire in luxury. This site, combined with my book “The Confident Investor,” will help you invest in the stock market to attain a comfortable and luxurious retirement.

As always, you are welcome to correspond with me personally on this site, on Twitter, or on Facebook. I look forward to helping you develop a portfolio that exceeds the retirement of your parents and your grandparents. Your life and your future are in your control. Now is the time to start the process of preparing for the rest of your life.

You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad.