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Investors Light Up as Cigarette Makers Move Higher 

So the headline-making news, says Morningstar analyst Philip Gorham, means the tobacco industry can breathe a sigh of relief as the potential payout could have put a material dent in its free cash flow for many years to come.

With the government’s racketeering case now settled, the analyst says, the companies’ solid cash-flow generation should ensure that the manufacturers can absorb any payouts without risk to their financial viability.

In response, investors lit up the shares of cigarette manufactures: In afternoon trading, Altria (MO), Reynolds American (RAI), and Lorillard (LO) were up 3.8%, 4.7%, and 3.1%, respectively.

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