Sturm Ruger falls after rare profit miss

Shares of Sturm Ruger (RGR -11.1%) tail off after the company misses the EPS estimate of analysts with its Q4 report.

There is a little bit of a shock factor as the profit miss is the first for the company in four years.

Gun demand has fallen off quite a bit lately, according to FBI background check tallies.

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Comments (10)
    , contributor
    Comment (1) | Send Message
    Considering their substantial increase in earnings, it appears simply because
    they "missed" the goal only marginally, there is a huge psychological crush
    here pushing down an essentially strong RGR...the dividend reduction, of
    course, makes it a "double whammy" -


    Mel Dorr
    26 Feb 2014, 11:09 AM Reply Like
  • dheide29
    , contributor
    Comments (7) | Send Message
    Earnings and margins are unsustainable as demand normalizes and channel inventories are full for first time in years. RGR tried to control inventories and prevent double ordering but that was not the case. Wholesalers overordered exactly as demand is returning to lower/normal levels. Cabela's gun/ammo comps were down 50% through the first 45 days of the quarter. They are starting to promote the category for first time in a while, a sign inventory is full. Unless retail demand rebounds dramatically soon I would think there is another shoe to drop with declines in margins, orders and the div.
    26 Feb 2014, 11:43 AM Reply Like
  • User 6830851
    , contributor
    Comments (276) | Send Message
    How des this view sych with RGR's recent investment in a new North Carolina factory, i.e., investment in, and expansion of, their production capability?
    26 Feb 2014, 11:56 AM Reply Like
  • Vettel
    , contributor
    Comments (30) | Send Message
    I suggest you read this:


    Sturm, Ruger & Company, Inc. Reports 2013 Fully Diluted Earnings of $5.58 Per Share and Declares Dividend of 54¢ Per Share
    February 25, 2014
    Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for 2013 the Company reported net sales of $688.3 million and fully diluted earnings of $5.58 per share, compared with net sales of $491.8 million and fully diluted earnings of $3.60 per share in 2012.


    For the fourth quarter of 2013, net sales were $181.9 million and fully diluted earnings were $1.33 per share. For the corresponding period in 2012, net sales were $141.8 million and fully diluted earnings were $1.00 per share.


    The Company also announced today that its Board of Directors declared a dividend of 54¢ per share for the fourth quarter, for shareholders of record as of March 14, 2014, payable on March 28, 2014. This dividend varies every quarter because the Company pays a percent of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.


    Chief Executive Officer Michael O. Fifer made the following observations related to the Company's results:
    •Our earnings increased 55% in 2013, driven by the 40% growth in sales and our ongoing focus on continuous improvement in our operations.
    •Our EBITDA of $195.7 million increased 54% from our 2012 EBITDA of $127.1 million.
    •New product introductions were a significant component of our sales growth as new product sales represented $195.8 million or 29% of firearm sales in 2013. New product introductions in 2013 included the LC380 pistol, the SR45 pistol, the Ruger American Rimfire rifle, the SR-762 rifle, and the Red Label II shotgun.
    •Demand for our products outpaced the growth in industry demand as measured by the National Instant Criminal Background Check System ("NICS") background checks (as adjusted by the National Shooting Sports Foundation) for 2013.
    •Cash generated from operations during 2013 was $120 million. At December 31, 2013, our cash totaled $55 million. Our current ratio is 1.8 to 1 and we have no debt.
    •In 2013, capital expenditures totaled $54.6 million, much of it related to machinery and equipment for new products, the purchase and building improvements of the Mayodan, North Carolina facility, and the expansion of production capacity for products in greater demand. We expect to invest approximately $35 million on capital expenditures during 2014 as we continue to prioritize new product development.
    •In 2013, the Company returned $41.1 million to its shareholders through the payment of dividends.
    •At December 31, 2013, stockholders' equity was $179.1 million, which equates to a book value of $9.26 per share, of which $2.85 per share was cash and equivalents.
    •During the fourth quarter of 2013, we began to manufacture a limited quantity of rifles at our 220,000 square foot facility in Mayodan, North Carolina that we acquired in September of 2013. Firearm production at the Mayodan facility is expected to increase during 2014.
    26 Feb 2014, 09:34 PM Reply Like
  • User 6830851
    , contributor
    Comments (276) | Send Message
    Yeah. I read that.
    27 Feb 2014, 07:11 PM Reply Like
  • ikarus
    , contributor
    Comments (1190) | Send Message
    You can expect more misses throughout 2014. The NICS data is the leading indicator of RGR sales and it is rolling over very quickly. NICS data was down -45% yoy in January -- Feburary data will be out soon and we will know how much it was down this month. NICS will most likely be down for the rest of 2014.


    If you look at RGR historic data, normalized earnings are around $1.00-1.30. The stock is probably worth around $20 best case, and it will be headed back in that direction over the next 2 years as gun demand normalizes to historic levels.
    27 Feb 2014, 02:00 AM Reply Like
  • jcbcpa
    , contributor
    Comments (12) | Send Message
    Why do you think gun demand is normalizing. It seems to me all the catalysts are still in place.
    27 Feb 2014, 06:37 AM Reply Like
  • ikarus
    , contributor
    Comments (1190) | Send Message
    All the catalysts except that the NICS data was -45% and Cabela's missed terribly on gun-related weakness?


    The run up was due to Obama's second term election and Sandyhook and both of those have been anniversaried now.
    28 Feb 2014, 03:47 AM Reply Like
  • jcbcpa
    , contributor
    Comments (12) | Send Message
    I think just looking at the NICS data and recent "misses" is a short term mistake. There are many underlying reasons why gun sales have increased in the past few years and those reasons unfortunately are not going away soon imho and will continue to play out in demand for guns.
    28 Feb 2014, 08:19 AM Reply Like
    , contributor
    Comments (20) | Send Message
    Sell with regret later or buy more with no later regrets
    27 Feb 2014, 08:32 AM Reply Like
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