Official February firearm data has just been released by the FBI showing that 2,309,393 background checks were done through the FBI's National Instant Criminal Background Check System (NICS) during the month. This figure is 96,500 higher than Pipeline Data's estimate of 2,212,855.
February's results demonstrate continued demand for firearm checks, but represent a slight decline from the 2,495,000 checks performed in January (which was second only to December's 2,784,000 checks). February's figure is 32% higher than that of February 2012 and exceeds the 19% growth rate for all of 2012.
Now that we have the official data, let's look at the implications for Sturm, Ruger & Co (RGR) and Smith & Wesson Holding Corporation (SWHC). As you can see from the chart below, annual growth fluctuated throughout the year until September. After that month's 16% increase, growth steadily accelerated for several consecutive months. October came in at 20%. November's growth was 31%, followed by a 49% increase in December and an incredible 81% spike in January. As we predicted, February's data is impressive in its own right, but clearly breaks the momentum of the trend.
NICS Background Checks
2011 | 2012 | Growth | |
SEP | 1,253,752 | 1,459,363 | 16% |
OCT | 1,340,273 | 1,614,032 | 20% |
NOV | 1,534,414 | 2,006,919 | 31% |
DEC | 1,862,327 | 2,783,765 | 49% |
JAN | 1,377,301 | 2,495,440 | 81% |
FEB | 1,749,903 | 2,309,393 | 32% |
Looking at the sequential growth figures, February is usually a stronger month for background checks than January. Consistent with our forecast, this February was weaker than January for the first time since the turn of the century.
NICS Background Checks
YEAR | JAN | FEB | CHANGE |
2000 | 639,972 | 707,070 | 10% |
2001 | 640,528 | 675,156 | 5% |
2002 | 665,803 | 694,668 | 4% |
2003 | 653,751 | 708,281 | 8% |
2004 | 695,000 | 723,654 | 4% |
2005 | 685,811 | 743,070 | 8% |
2006 | 775,518 | 820,679 | 6% |
2007 | 894,608 | 914,954 | 2% |
2008 | 942,556 | 1,021,130 | 8% |
2009 | 1,213,885 | 1,259,078 | 4% |
2010 | 1,119,229 | 1,243,211 | 11% |
2011 | 1,323,336 | 1,473,513 | 11% |
2012 | 1,377,301 | 1,749,903 | 27% |
2013 | 2,495,440 | 2,309,393 | -7% |
Make no mistake -- 2.3 million background checks is a strong result. As we stated in our February forecast, RGR and SWHC have a hefty backlog and will be busy for some time to come. However, stocks are often swayed by momentum and expectations. February's figures show that momentum remains strong, but took a breather from the breakneck pace experienced in January.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
