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What's in the Cards for Strum, Ruger (RGR) in Q4 Earnings?

Sturm, Ruger & Company, Inc.RGR is scheduled to release fourth-quarter 2016 financial results on Feb 22.

The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters, with the average positive surprise being 21.69%.

Let's see how things are shaping up prior to this announcement.

Factors at Play

The company has been witnessing a substantial increase in estimated sell-through of its products from the independent wholesale distributors to retailers, the best available measure of demand for its products. During the first nine months of 2016, a double-digit improvement was observed in this measure and a similar increase can be expected in the fourth quarter as well.

According to the FBI's National Instant Criminal Background Check System ("NICS"), 2016 firearm background checks jumped 19% from the equivalent figure of 2015, while the same for fourth quarter increased 1.7% year over year. There is often a spike in background checks in the wake of mass shootings, as demand for weapons increases amid fear of stricter gun control measures.

A rise in firearm background checks indicates that demand for firearm sales is on the rise. This could definitely bolster sales for the two publicly traded gun manufacturers, American Outdoor Brands Corporation and Sturm Ruger, in the soon-to-be reported quarter.

On the flip side, although the company witnessed robust new product sales growth in the third quarter, management expects to observe a decline in the same during fourth quarter, as sales of the AR-556 and the LC9s will no longer be included among the new products.

The Zacks Consensus Estimate for fourth-quarter earnings for Sturm, Ruger is pegged at 91 cents a share, reflecting 3.41% year-over-year growth.

Earnings Whispers

Our proven model does not conclusively show that Strum, Ruger is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: Strum, Ruger has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 91 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Strum, Ruger carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Sturm, Ruger & Company, Inc. Price and EPS Surprise

Sturm, Ruger & Company, Inc. Price and EPS Surprise | Sturm, Ruger & Company, Inc. Quote

Stocks that Warrant a Look

Here are a few stocks in the consumer discretionary space, which have the right combination of elements to post an earnings beat this quarter:

Cinemark Holdings, Inc. CNK is set to release its quarterly report on Feb 23. The company holds a Zacks Rank #3 and has an Earnings ESP of +2.38%.

Tribune Media Company TRCO is set to release its quarterly report on Mar 1. The company carries a Zacks Rank #3 and has an Earnings ESP of +4.44%.

Wolverine World Wide, Inc. WWW is set to release its quarterly report on Feb 22. The company has a Zacks Rank #3 and an Earnings ESP of +3.23%.

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Tribune Media Company (TRCO): Free Stock Analysis Report

Sturm, Ruger & Company, Inc. (RGR): Free Stock Analysis Report

Cinemark Holdings Inc (CNK): Free Stock Analysis Report

Wolverine World Wide, Inc. (WWW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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