Reynolds American Inc.’s RAI first-quarter 2016 adjusted earnings of 50 cents per share were in line with the Zacks Consensus Estimate. Earnings improved 16.3% from the year-ago quarter backed by higher cigarette and moist snuff pricing.Adjusted earnings per share exclude charges associated with the transaction and financing cost, implementation cost and charges related to the Engle Progeny lawsuits, other tobacco-related litigations and Non-Participating Manufacturer (NPM) Partial Settlement with two additional states.Revenues & Operating MarginReynolds’ net sales increased 41.8% year over year to $2.91 billion driven by higher sales across all the segments. Quarterly net sales, also, met the Zacks Consensus Estimate in the quarter.Adjusted operating income surged 72.4% to $1.31 billion on the back of higher pricing of moist snuff and cigarettes.Segment DetailsRJR Tobacco: Segment revenues improved nearly 49.9% to $2.41 billion on the back of market share gain by brands like Camel and Pall Mall.Volumes rose 35.1% benefiting from the addition of the Newport brand following the Lorillard acquisition. RJR Tobacco’s combined retail market share of Newport, Camel and Pall Mall increased 0.2 percentage points (pp) year over year to 30.0%.The Camel brand continued to perform well though its market share was up by just 1 pp to 8.2%. However, Pall Mall’s market share went down 0.3 pp to 7.8%. Market share of Newport, the leading menthol brand, increased 0.6 pp to 14.0% backed by new retail contracts.Compared with the year-ago quarter, the segment’s adjusted operating income climbed 73.8% to $1.12 billion as a result of lower operating costs. Operating margin increased 6.4 pp to 46.5% buoyed by improved mix of premium cigarettes.American Snuff: Segment revenues grew 7.46% year over year to $216 million supported by higher volumes.The segment’s sales volume outpaced industry volume growth and increased 3.3% year over year. The moist snuff market share advanced 0.2 pp to 33.4%. The brand benefited from solid demand for Grizzly’s pouch styles and Wintergreen offerings.Adjusted operating income rose 11.9% year over year to $133 million gaining from higher pricing and volume. Operating margin increased 2.4 pp to 61.3% backed by improved mix of premium cigarettes.Santa Fe: Segment revenues rose 33.7% year over year to $218 million backed by higher volume.The segment’s super premium brand Natural American Spirit’s volume increased 22.1%, and market share went up 0.3 pp to 2%.Adjusted operating income increased 33.2% year over year to $123 million, driven by pricing and volume gains in the super premium cigarette category. Operating margin improved 2.5 pp to 56.4%.Other Financial UpdateDuring the first-quarter conference call, Reynolds announced a dividend hike of 16.7%. The annualized dividend paid by Reynolds is $1.68 per share.The company also completed the sale of $5 billion worth of Natural American Spirits business outside the U.S.2016 GuidanceReynolds maintained the full-year 2016 guidance. The company expects earnings within $2.25 to $2.35 on a split-adjusted basis, representing 13.6% to 18.7% growth from the year-ago tally of $1.98.Zacks Rank & Other Key PicksReynolds sports a Zacks Rank #1 (Strong Buy). Other favorably ranked stocks in the tobacco industry include Altria Group Inc. MO and Philip Morris International Inc. PM, both carrying a Zacks Rank #2 (Buy). Another stock in the broader consumer staples sector worth considering is Sanderson Farms Inc. SAFM with the same Zacks Rank as Altria and Philip Morris.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SANDERSON FARMS (SAFM): Free Stock Analysis Report ALTRIA GROUP (MO): Free Stock Analysis Report PHILIP MORRIS (PM): Free Stock Analysis Report REYNOLDS AMER (RAI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research