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Sturm, Ruger & Company, Inc.
by Tracey RyniecJune 22, 2012 | Comments : 0 Recommended this article: (1)
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Sturm, Ruger makes firearms for the commercial sporting market. Headquartered in Connecticut, it manufactures in both New Hampshire and Arizona.
Taking New Orders Again
On Mar 21, 2012, Sturm Ruger announced that it had a million order backlog and that it was temporarily suspending acceptance of new orders.
It is basically unheard of for a manufacturer, of any product, to simply say it wasn't going to take any more orders because it was overwhelmed.
On May 29, the company lifted that suspension and was again accepting orders from its independent wholesale distributors.
Sturm Ruger said demand for its products was "very strong" and that the current backlog, even with the 2 month suspension, remained significantly above the prior years levels.
Another Earnings Beat in Q1
On May 1, Sturm Ruger reported first quarter results and blew by the Zacks Consensus Estimate for the 10th quarter in a row.
It beat by 16% with earnings of 79 cents compared to just 42 cents in the year ago quarter.
Sales soared 33% to $112.3 million from $75.4 million in the first quarter of 2011. New product introductions represented 37% of sales in the first quarter.
As of Mar 31, 2012, the company had cash, cash equivalents and short-term investments totaling $95.8 million. Even more impressively, it has no debt.
With the impressive balance sheet, the company has been rewarding shareholders. Sturm Ruger now pays a dividend yielding a very attractive 3.5%.
Valuations Still Solid
Shares soared in 2012 as sales took off on fears that President Obama would win a second term and then, being a lame duck, try and restrict gun ownership.
Then, just as suddenly, investors dumped the stock.
The recent sell-off has created an opportunity for value investors which wasn't there before as the stock soared.
Sturm Ruger is now trading with a forward P/E of 12.9, which is under the 15x level I use for value stocks.
Its price-to-book ratio of 4.9 is a little higher than I normally look for as a P/B ratio under 3.0 usually indicates value.
But it has other solid fundamentals including a 1-year return on equity (ROE) of 34.4% which blows away the average of the S&P 500 of just 13.1%.
Zacks Consensus Estimate Rises for 2012
Analysts are sticking with their full year estimates. In the last 60 days the 2012 Zacks Consensus Estimate has risen to $2.98 from $2.70 per share.
That is earnings growth of 42% as the company made only $2.09 last year.
Sturm Ruger is operating on all cylinders. Value investors have been given a second chance to jump on board.
This Week's Value Zacks Rank Buy Stocks
Saia Inc. (SAIA), a regional trucker, is a triple threat. This Zacks #1 Rank (Strong Buy) is a value stock with a forward P/E of 13.7, is expected to see triple digit earnings growth in 2012 and has momentum as shares are at a 2-year high. Read the full article.
Local television stations are loving Decision 2012 as political advertising revenue has sharply increased. Gray Television, Inc. (GTN) has turned it around from an earnings loss in 2011 to being profitable in 2012. This Zacks #1 Rank (Strong Buy) remains extremely cheap, with a forward P/E of just 2.3. Read the full article.
How much more of a run does Foot Locker, Inc. (FL) have? Shares of this Zacks #1 Rank (Strong Buy) are near 5-year highs. Yet there's still plenty of value as the company trades with a forward P/E of just 12.6. Read the full article.
The oil services companies still have mojo. Oil States International, Inc. (OIS) had a record first quarter as drilling demand remained hot. Yet skittish investors have sold off shares, making this company a true value stock with a forward P/E of just 8.7. Read the full article.
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