Sturm, Ruger & Co. Looks To Start 2014 With A Bang

Feb.24.14 | About: Sturm, Ruger (RGR)

Sturm, Ruger & Co. Inc. (NYSE:RGR) is set to report FQ4 2013 earnings after the market closes on Tuesday, February 25th. Sturm, Ruger & Co., or Ruger for short, is a firearms manufacturer based in Southport, Connecticut. This quarter Wall Street is looking for Ruger to increase FQ4 sales by 24% compared to last year. The 24% growth target is quite significant considering that crime rates are down near historic lows and the US is in the process of scaling down military spending. Here's how investors expect Sturm, Ruger & Co. to report Tuesday.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

(Click Here to see All Estimates for Sturm, Ruger & Co.)

The current Wall Street consensus expectation is for RGR to report $1.33 EPS and $176.12M revenue while the current Estimize.com consensus from 17 Buy Side and Independent contributing analysts is $1.40 EPS and $176.19M revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Sturm, Ruger & Co. to beat the Wall Street consensus by a wide margin on EPS and a small differnetial on revenue.

Over the previous six quarters the Estimize consensus has been more accurate than Wall Street in forecasting Sturm, Ruger & Co.'s EPS and revenue every single time. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a smaller differential compared to previous quarters.

The distribution of estimates published by analysts on the Estimize.com platform range from $1.29 to $1.53 EPS and $170.00M to $180.00M in revenues. This quarter we're seeing a narrower distribution of estimates for Sturm, Ruger & Co.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A narrower distribution of estimates signaling more agreement in the market could mean less volatility post earnings.

The Wall Street EPS and revenue expectations both remained flat throughout the quarter. Over the same period of time the Estimize community raised its EPS forecast from $1.30 to $1.40 and increased its revenue consensus from $175.41M to $176.19M. Timeliness is correlated with accuracy and upward analyst revisions going into a report are often a bullish indicator.

The analyst with the highest estimate confidence rating this quarter is WallStreetBean who projects $1.43 EPS and $182.00M in revenue. In the Winter 2014 season WallStreetBean is rated as the 19th best analyst and is ranked 10th overall among over 3,900 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case WallStreetBean is expecting Sturm, Ruger & Co. to beat the Estimize consensus on EPS and exceed by a wide margin on revenue.

Despite low crime rates and decreased military spending, contributing analysts on the Estimize.com platform are expecting Ruger to report in-line with Wall Street expectations on revenue and exceed on EPS by a significant margin. If Sturm can manage to beat the high earnings expectations from Estimize the firearms company should be able to start the year with a bang.

Disclosure: None.