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The Zacks Analyst Blog Highlights: Sturm, Ruger, American Outdoor Brands, Vista Outdoors and Dick's Sporting Goods
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For Immediate Release
Chicago, IL – March 2, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Sturm, Ruger & Company, Inc. (RGR - Free Report) , American Outdoor Brands Corp. , Vista Outdoors Inc. (VSTO - Free Report) and Dick’s Sporting Goods, Inc. (DKS - Free Report) .
Can Gun Stocks Emerge from the Slump Post-Florida Shooting?
The U.S. gun industry has been going through a rough patch since 2016 with companies reporting declining sales figures. The slump in shares stemmed from the election of Donald Trump in 2016, who, as a Republican incumbent, perceived to be softer on gun laws. This has certainly affected the sale of guns thus resulting in lower profits and job cuts.
Whether President Trump’s surprise embracing of gun control on live television on Feb 28, 2018, and push for renewing gun safety legislation will reshape the industry remains to be seen. This is more so because Senate Republicans sounded neither convinced nor interested in Trump’s gun control ambitions.
Trump’s Election Triggers Decline
The gun industry has been witnessing a steep decline in both sales and profits since the election of Trump in 2016. And the reasons are obvious. Trump is a Republican endorsed by the National Rifle Association (NRA).
Major gun manufactures have reported weak sales in their recent earnings releases. Sturm, Ruger & Company, Inc.’s fourth-quarter 2017 adjusted earnings of 56 cents per share missed the Zacks Consensus Estimate of 62 cents by 9.7%. Firearm sales (comprising 99.1% of total sales) decreased 21.4% in 2017 and castings sales declined 22.7%. Also, the company said that it cut 700 jobs last year. (Read: Sturm, Ruger Misses Q4 Earnings, Beats Sales Estimates)
The gun manufacturing industry enjoyed strong sales during the regime of Barack Obama, and even during the presidential campaign between Democrat candidate Hillary Clinton and Trump. The industry also generated huge job growth during this period. According to the National Sports Shooting Foundation, between 2008 and 2018, the gun industry grew from 166,000 employees to 301,000. Wages too grew from $6.4 billion to $15.2 billion.
Things started changing post Trump’s election. During Obama’s regime, sale of guns, in particular semi-automatic rifles, would often be driven by mass shootings. But with Trump as President, that too seems to have come to a halt.
However, gun stocks witnessed a momentary jump after Trump spoke on tightening background checks for guns in response to the recent high school massacre in Florida. This saw shares of American Outdoor Brands Corp. and Sturm, Ruger rally the very next day, on Feb 22. Shares of Sturm, Ruger increased 3.6%, while American Outdoor Brands jumped 7.9%, before ending with an increase of 0.6%.
Record Decline Follows Florida Shooting
In fact, Trump’s comments were seen as increasing the chances of more curbs on gun ownership, thus giving a momentary sales boost. Analysts on the other hand believe that what Trump has been saying is quite surprising.
The rally in stocks did not last long and despite Trump telling state governors on Monday that "we have to have action" in the wake of the latest U.S. mass shooting and urging them not to be "afraid" of challenging the NRA, gun stocks continue to decline.
Shares of Strum, Ruger and American Outdoors have plunged 18.7% and 24.56%, respectively. The decline has been the steepest than it was after past shootings. Then again, shares of Vista Outdoors Inc. have rallied 13.73% in the last 30 days. Understandably, Trump’s comments haven’t been followed by concrete action and sales seem to be declining, given that strong gun control doesn’t seem to be high on Congress’ agenda.
Meanwhile, shares of Dick’s Sporting Goods, Inc., which sells guns along with a wide range of sports gear, have increased 1.78% in the last 30 days. Also, on Feb 28, 2018, Dick’s Sporting Goods announced that it would no longer be selling assault-style rifles and high-capacity magazines. It is at the same time opting not to sell any kind of guns to anyone under the age of 21 years. Dick’s Sporting carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, though unexpected, Trump’s comments on “writing out” use of bump stocks and fighting the gun lobby, post the Florida shooting saw the sale of guns increasing. This too was short-lived. Although Florida Governor Rick Scott and Senator Marco Rubio have said that they are planning to raise the minimum age of buying a gun from 18 to 21, Republican politicians still don’t have a concrete agenda in place.
Moreover, Scott has also hinted that a ban on bump stocks hasn’t helped the industry much. Since Feb 15, 2018, a day after the shooting, shares of Vista Outdoors have declined 12.81%, while Strum Ruger, Dicks Sporting and American Outdoor Brands Corporation have plunged 14.07%, 4.84% and 16.2%, respectively.
Buck Stops for Gun Stocks
The U.S. gun industry isn’t in its best phase, with both sales and profits declining since Trump’s election. Given that Republicans are softer on gun-control laws, even incidents like Florida shooting haven’t impacted the sale of guns much. The initial rally after Trump’s comments on writing out the use of bump stocks, didn’t last long with most companies reporting sharp decline in sales. Also, his latest gun control plea did not appeal to the Senators, leaving doubts over any change in the industry’s prospects.
Analysts believe that gun investors, which comprise a large number of military veterans and gun enthusiasts, might still continue with their long-term investments in the industry, while institutional investors seem to have somewhat lost their appetite for it. That said, the backdrop certainly calls for a cautionary approach toward gun stocks, at least for the short term.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Sturm, Ruger, American Outdoor Brands, Vista Outdoors and Dick's Sporting Goods
For Immediate Release
Chicago, IL – March 2, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Sturm, Ruger & Company, Inc. (RGR - Free Report) , American Outdoor Brands Corp. , Vista Outdoors Inc. (VSTO - Free Report) and Dick’s Sporting Goods, Inc. (DKS - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Thursday’s Analyst Blog:
Can Gun Stocks Emerge from the Slump Post-Florida Shooting?
The U.S. gun industry has been going through a rough patch since 2016 with companies reporting declining sales figures. The slump in shares stemmed from the election of Donald Trump in 2016, who, as a Republican incumbent, perceived to be softer on gun laws. This has certainly affected the sale of guns thus resulting in lower profits and job cuts.
Whether President Trump’s surprise embracing of gun control on live television on Feb 28, 2018, and push for renewing gun safety legislation will reshape the industry remains to be seen. This is more so because Senate Republicans sounded neither convinced nor interested in Trump’s gun control ambitions.
Trump’s Election Triggers Decline
The gun industry has been witnessing a steep decline in both sales and profits since the election of Trump in 2016. And the reasons are obvious. Trump is a Republican endorsed by the National Rifle Association (NRA).
Major gun manufactures have reported weak sales in their recent earnings releases. Sturm, Ruger & Company, Inc.’s fourth-quarter 2017 adjusted earnings of 56 cents per share missed the Zacks Consensus Estimate of 62 cents by 9.7%. Firearm sales (comprising 99.1% of total sales) decreased 21.4% in 2017 and castings sales declined 22.7%. Also, the company said that it cut 700 jobs last year. (Read: Sturm, Ruger Misses Q4 Earnings, Beats Sales Estimates)
The gun manufacturing industry enjoyed strong sales during the regime of Barack Obama, and even during the presidential campaign between Democrat candidate Hillary Clinton and Trump. The industry also generated huge job growth during this period. According to the National Sports Shooting Foundation, between 2008 and 2018, the gun industry grew from 166,000 employees to 301,000. Wages too grew from $6.4 billion to $15.2 billion.
Things started changing post Trump’s election. During Obama’s regime, sale of guns, in particular semi-automatic rifles, would often be driven by mass shootings. But with Trump as President, that too seems to have come to a halt.
However, gun stocks witnessed a momentary jump after Trump spoke on tightening background checks for guns in response to the recent high school massacre in Florida. This saw shares of American Outdoor Brands Corp. and Sturm, Ruger rally the very next day, on Feb 22. Shares of Sturm, Ruger increased 3.6%, while American Outdoor Brands jumped 7.9%, before ending with an increase of 0.6%.
Record Decline Follows Florida Shooting
In fact, Trump’s comments were seen as increasing the chances of more curbs on gun ownership, thus giving a momentary sales boost. Analysts on the other hand believe that what Trump has been saying is quite surprising.
The rally in stocks did not last long and despite Trump telling state governors on Monday that "we have to have action" in the wake of the latest U.S. mass shooting and urging them not to be "afraid" of challenging the NRA, gun stocks continue to decline.
Shares of Strum, Ruger and American Outdoors have plunged 18.7% and 24.56%, respectively. The decline has been the steepest than it was after past shootings. Then again, shares of Vista Outdoors Inc. have rallied 13.73% in the last 30 days. Understandably, Trump’s comments haven’t been followed by concrete action and sales seem to be declining, given that strong gun control doesn’t seem to be high on Congress’ agenda.
Meanwhile, shares of Dick’s Sporting Goods, Inc., which sells guns along with a wide range of sports gear, have increased 1.78% in the last 30 days. Also, on Feb 28, 2018, Dick’s Sporting Goods announced that it would no longer be selling assault-style rifles and high-capacity magazines. It is at the same time opting not to sell any kind of guns to anyone under the age of 21 years. Dick’s Sporting carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, though unexpected, Trump’s comments on “writing out” use of bump stocks and fighting the gun lobby, post the Florida shooting saw the sale of guns increasing. This too was short-lived. Although Florida Governor Rick Scott and Senator Marco Rubio have said that they are planning to raise the minimum age of buying a gun from 18 to 21, Republican politicians still don’t have a concrete agenda in place.
Moreover, Scott has also hinted that a ban on bump stocks hasn’t helped the industry much. Since Feb 15, 2018, a day after the shooting, shares of Vista Outdoors have declined 12.81%, while Strum Ruger, Dicks Sporting and American Outdoor Brands Corporation have plunged 14.07%, 4.84% and 16.2%, respectively.
Buck Stops for Gun Stocks
The U.S. gun industry isn’t in its best phase, with both sales and profits declining since Trump’s election. Given that Republicans are softer on gun-control laws, even incidents like Florida shooting haven’t impacted the sale of guns much. The initial rally after Trump’s comments on writing out the use of bump stocks, didn’t last long with most companies reporting sharp decline in sales. Also, his latest gun control plea did not appeal to the Senators, leaving doubts over any change in the industry’s prospects.
Analysts believe that gun investors, which comprise a large number of military veterans and gun enthusiasts, might still continue with their long-term investments in the industry, while institutional investors seem to have somewhat lost their appetite for it. That said, the backdrop certainly calls for a cautionary approach toward gun stocks, at least for the short term.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.