The Black Friday buying spree wasn't confined to e-readers,
flat-panel TVs and digital tablets this year. Gun sales also shot
Criminal background checks required to buy a gun hit a
single-day record of 154,873 on Black Friday, according to the
National Shooting Sports Foundation. That was nearly 20% higher
than the previous high for checks by the FBI National Instant
Criminal Background Check System (NICS), set on Black Friday last
Black Friday historically has been among the most active days
for firearm sales. This year's new one-day record wasn't
unexpected, says the NSSF, given reports of increased gun sales
following President Obama's re-election amid fears over tighter
gun control laws.
Gun makerSturm Ruger (
) likely cashed in on the Black Friday fervor. The company makes
rifles, shotguns, pistols and revolvers. They're sold through
independent wholesale distributors mainly to the commercial
sporting market. They're also sold into the military, law
enforcement and home defense markets.
Sturm Ruger's business has been thriving amid a recent surge
in gun sales that reaches well beyond the Black Friday frenzy.
Sales and profits have climbed by double digits the past six
quarters. Gun sales took off in 2012 amid concerns over gun
regulations during President Obama's second term and other
trends, such as more women buying hand guns, says CL King &
Associates analyst Jim Barrett, who owns shares in Sturm
Sturm Ruger has participated in the surge in sales, he says,
and has probably led it.
It wouldn't be the first time Sturm Ruger led the industry
during boom times.
"There was a boom in the years after President Obama first got
elected and Sturm Ruger was leading that boom because it's the
most skilled in the industry developing new products, primarily
small hand guns," Barrett said.
Sturm Ruger's new product development skills have helped it
deliver strong sales gains throughout the year. Most recently, in
the third quarter, sales popped 47% to $118.2 million, ahead of
views by analysts polled by Thomson Reuters. Earnings climbed 57%
to 88 cents per share, also besting forecasts. The big increase
in earnings was driven by the strong sales gain and the company's
ongoing focus on continuous improvement in its operations.
New product introductions have been a major driver of sales
growth. In the first nine months of the year, new product sales
represented $130.3 million, or 38%, of total sales. New products
included the Ruger American Rifle, SR22 pistol, 10/22 Takedown
rifle and the Single-Nine revolver.
Demand for its products outpaced the growth in overall
industry demand as measured by the NICS background checks (as
adjusted by the NSSF) for both the third quarter and nine
In the third quarter, estimated Sturm Ruger units sold from
distributors to retailers surged 62% vs. a year earlier, while
NICS background checks rose 22%. For the nine months, Sturm Ruger
units sold rose 60%, while NICS background checks increased
The company is riding the crest of a trend in gun buying that
watchers expect to continue.
"While we do believe some of the market's recent outsized
strength is due to political buying on fear of increased firearms
regulations, we also believe a larger social shift on firearms
ownership has driven many first-time recreational and
self-defense owners," said analyst Mike Greene of the Benchmark
Co. in a report.
He notes growing social acceptance of firearms for self
defense and as a recreational activity.
He expects these new owners to continue as repeat buyers since
the first purchase is often the most difficult to draw.
Overall, the appetite for firearms remains strong, adds Piper
Jaffray analyst Sean Naughton. While he doesn't follow Sturm
Ruger, he does follow other companies that sell firearms,
including outdoor equipment retailerCabela's (
He estimates 20% of Cabela's third-quarter sales came from
He says an increase in TV shows and media coverage on firearms
is helping to drive the strong demand for guns, as is a "general
sense of fear" on the part the public, whether it's related to
the economy or the looming fiscal cliff.
"There's a lot of uncertainty around fiscal responsibility,
potential increases in regulation and a slower-than-anticipated
economic recovery that is likely causing an increase in demand
for firearms," he said.
Followers expect Sturm Ruger to continue on the growth path.
Analysts polled by Thomson Reuters expect full-year earnings
rising 57% to $3.29 a share. But they see 2013 earnings falling
4% amid tough comparisons.
Still, analysts are upbeat about its prospects.
"We expect strong near-term firearms sales from
election-related and holiday-season buying, and we also continue
to expect a low double-digit long-term growth rate, with Sturm
Ruger outpacing industry growth due to its strong new product
development," writes Greene.
In reiterating his "strong buy" rating on Sturm Ruger, Barrett
wrote in a report: "We continue to believe President Obama's
re-election will be very positive for gun sales in coming