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Vector Group Ltd. Message Board

  • spook2b spook2b Aug 6, 2007 3:02 PM Flag

    cash dividend policy

    continues the same as per Lorber on today's cc...

    From 10Q, I see a $10MM drop in inventories (also mentioned on cc)

    Also on cc, they mentioned that some 2007 shipments were made in 2006 industrywide - ~2MM for VGR.

    Also, part of today's reported gain came from a reversal on VGR's holdings in LTS.

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    • Event
      VGR reported solid 2Q07 (June) operating EPS. Raising estimates
      and price target. Also publishing our sum of the parts valuation figure.
      Key Points
      � VGR's operating EPS improves. VGR reported 2Q07 operating
      EPS of $0.27 (ex-unusual gains of $0.07) vs. $0.21 in 2Q06
      (ex-debt related charges of $0.26), above our $0.24 estimate.
      � Sales growth accelerates as unit shipments continue to
      outpace the industry. Sales at the Liggett Division (99% of total)
      rose 25% during 2Q07. Unit growth, particularly Grand Prix,
      contributed 14.2% of the sales gain while favorable pricing added
      roughly 10%-11%. Wholesale unit shipments increased 3.8% as
      compared to a 4.6% decline for the industry. At retail, Liggett's unit
      shipments rose 4.5% versus a 2.7% decrease for the industry.
      Above average sales trends should continue through 3Q07.
      � Real-estate businesses contributing to growth in pre-tax
      income. Total pre-tax income rose 44% Y/Y to $30.2 million
      (excluding an $8.1MM gain) in the quarter. The increase was
      largely driven by sales gains in the tobacco business, however, a
      78% increase in its real estate businesses Y/Y to $6.9MM also
      contributed to the gain. VGR's consolidated pre-tax income should
      continue to be supported by gains in real estate income.
      � Updating our EPS estimates. We are essentially flowing through
      the 2Q07 upside from our 2Q07 estimate, partially offset by higher
      share dilution. Therefore, our current year EPS estimate has been
      raised to $1.13 from $1.12, previously. Our out year EPS estimate
      has been raised to $0.95 from $0.93. Our estimates do not assume
      any potential asset sales over the next couple of years.
      � Sum of the parts analysis supports current valuation. We have
      raised our price target to a range of $21-$24 a share from $18-$21,
      previously, based on a very basic sum of the parts analysis. Our
      price target primarily reflects VGR's $1.60 annual dividend, a core
      tobacco business value of around $17.00-$19.00 a share, and
      $2.50-$3.00 a share from the company's 50% stake in Douglas
      Elliman Realty. In addition, VGR has ownership interests in several
      properties, which could be accretive in the future or sold for realized
      gains. While the timing is uncertain, these other real estate interests
      could add additional value to our targeted price range.
      Valuation/Risks
      We believe that VGR shares will trade on its $1.60 a share dividend,
      steady tobacco business, and a potential earnings contribution from
      its real estate businesses. Our revised price target of $21-$24 (from
      $18-$21) represents a realistic sum-of-the parts valuation. Risks:
      include litigation, increased regulation, tax increases, and declining
      cigarette consumption.

 
VGR
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