Here's What The Buy Side Expects From Sturm, Ruger & Co.

May. 5.14 | About: Sturm, Ruger (RGR)

Sturm, Ruger & Co. Inc. (NYSE:RGR) is set to report FQ1 2014 earnings after the market closes on Monday, May 5th. Sturm, Ruger & Co., or Ruger for short, is an American firearms manufacturer based in Southport, Connecticut. Ruger has beaten Wall Street's revenue expectations in every quarter over the past 2 years and has beaten the Street's EPS consensus 7 out of 8 times. Last quarter was the first time in the past 2 quarters in which Ruger failed to beat the Wall Street consensus on earnings. On Monday the Street expects Ruger to report a 9c drop in earnings compared to last year and a 5% gain in year over year revenue. Here's what investors expect on Monday.

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

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(Click Here to see Estimates and Interactive Features for Ruger)

The current Wall Street consensus expectation is for Ruger to report $1.11 EPS and $164.14M revenue, while the current Estimize.com consensus from 11 Buy Side and Independent contributing analysts is $1.11 EPS and $164.62M in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Ruger to report right in-line with the Wall Street consensus.

Over the past 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Ruger's revenue every time and has been more accurate in predicting EPS 5 times. 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 more accurate than Wall Street up to 69.5% of the time, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by Deutsche Bank Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

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 almost no difference between the expectations from Estimize and Wall Street.

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The distribution of estimates published by analysts on the Estimize.com platform range from $1.04 to $1.25 EPS and from $162.17M to $169.50M in revenues. This quarter we're seeing an average distribution of estimates on EPS for Ruger and a narrow range of estimates on revenue.

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 narrow distribution of EPS estimates signals more agreement in the market, which could mean less volatility post earnings.

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Throughout the quarter the Wall Street EPS consensus rose from $1.00 to $1.11, while the Estimize consensus climbed from $1.04 to $1.11. Meanwhile, the Wall Street revenue consensus increased from $162.07M to $164.14M, while the Estimize consensus went up from $161.28M to $164.62M. Timeliness is correlated with accuracy and upward analyst revisions going into an earnings report are often a bullish indicator.

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The analyst with the highest estimate confidence rating this quarter is Niners49, who projects $1.10 EPS and $164.00M in revenue. Niners49 is ranked 114th overall among over 4,400 contributing analysts. Over the past year Niners49 has been more accurate than Wall Street in forecasting EPS and revenue 51% and 56% of the time respectively throughout 63 estimates. 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, Niners49 is making a bearish call expected Ruger to miss the Estimize consensus on both EPS and revenue by a small margin.

Sturm, Ruger & Co. has built up a solid track record of beating the expectations from Wall Street over the past 2 years. But last quarter Sturm reported earnings that were right in line with the Street's expectations. This quarter for the first time in 2 years the Estimize community is pumping the breaks on Sturm and expecting a second consecutive in-line earnings report.

Disclosure: None