What's In The Stores For Sturm, Ruger (RGR) In Q1 Earnings?
Zacks Investment Research | May 02, 2018 10:20PM ET
Sturm, Ruger & Company (NYSE:RGR) is scheduled to release first-quarter 2018 results on May 8.
In the last reported quarter, the company reported a negative earnings surprise of 9.68%. Moreover, Sturm, Ruger missed the Zacks Consensus Estimate in three of the trailing four quarters, the average earnings miss being 11.63%.
Let’s see how things are shaping up for the company prior to this announcement.
Factors at Play
In 2017, Strum, Ruger suffered a 17% year-over-year decline in its estimated unit sell-through of its products from the independent wholesale distributors to retailers, owing to decreased overall consumer demand throughout the year. Moreover, reduced purchasing by retailers to lower inventories and generate cash as well as aggressive price discounting and enticing consumer rebates offered by competitors, along with increased industry manufacturing capacity, led to this lower unit sell-through. With no near-term improvement expected in these factors, we expect the company’s first-quarter 2018 results to reflect similar reduced unit sell-through.
On a bright note, according to the FBI's National Instant Criminal Background Check System (“NICS”), firearm background checks improved 6.3% year over year in first-quarter 2018, which shows growth in demand. This, in turn, is likely to boost sales of publicly traded gun manufacturers like Sturm Ruger.
Moreover, realizing that consumers’ preference is shifting toward concealed carry products and modern sporting rifles, Strum, Ruger shifted focus toward the development of commercial sporting products, which its management believes is the key driver of demand. To reap the benefits of the growing demand of sport rifles, in 2017, the company unveiled a range of products like the Mark IV pistols, Precision Rifle, the LCP II pistol and the American pistol. Per management, due to timing of their launches, these products had a little impact on 2017’s results. Therefore, we may expect these product innovations to boost the company’s firearm sales partially, beginning from first-quarter 2018.
Meanwhile, the Zacks Consensus Estimate for Strum, Ruger’s first-quarter earnings shows 42.2% year-over-year decline. The same for revenues is pegged at $117.3 million, implying 30% annual decline.
Sturm, Ruger & Company, Inc. Price and EPS Surprise
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