Sturm Ruger Falls as CEO Sees Chance of Gun-Sales PlateauCaroline Chen
Sturm, Ruger & Co., the largest publicly traded U.S. gun maker, climbed to its highest price since at least 1985 on a “solid” outlook for 2014 after new models drove a 45 percent jump in third-quarter sales.
More new products will be introduced next year under the company’s “core business strategy,” with “potential for good solid growth in 2014,” Chief Executive Officer Michael Fifer told analysts today on a conference call.
Quarterly revenue surged to $170.9 million, the Southport, Connecticut-based company said in its earnings report yesterday. That beat the $136 million estimate of Andrea James, an analyst at Dougherty & Co. in Minneapolis, who rates the shares neutral.
Sturm Ruger has benefited from the national gun-control debate, as enthusiasts stocked up ahead of potentially tighter laws. Even though the federal gun-control push has faded and the stockpiling frenzy has calmed down, lobbying in the coming midterm election year will keep interest “on the front burners,” said Brian Rafn, director of research at Milwaukee-based Morgan Dempsey Capital Management LLC, a 25-year shareholder of Sturm Ruger.
The stock rose 3.4 percent to $73.45 in New York, after reversing a decline earlier in the day. That was the highest closing price since Sept. 18, 1985, according to data compiled by Bloomberg. The shares have gained 56 percent this year, as the Standard & Poor’s 600 Smallcap Index advanced 33 percent.
Sturm Ruger is focused on producing a mix of models to reduce the risk of less demand in a single type of firearm, Fifer said.
The company cited increased demand for its new products, including the LC380 pistol, the SR45 pistol and the Ruger American Rimfire rifle. New products represented 32 percent of firearm sales in the first nine months, and its models outpaced the industry in demand growth, Sturm Ruger said yesterday.
New additions to the ranks of gun owners helped drive up demand, Fifer said on the call. Ruger staff members “working the counters” in retail stores have observed a high number of customers buying their first firearm in the past year, he said.
“If they can keep new-product sales above 30 percent,” Sturm Ruger will be able “to counter the overall market shrinking,” Rafn said.