You can also look at the Battenfeld acquisition based on cash flow multiple, which appears to be extraordinarily high high at over 13x. EBITDA, compared to SWHC which is valued at 6x EBITDA.
On an acquisition you either buy FF&E and inventory and/or goodwill. From a tax perspective you want goodwill because you get amortization over 15 years to write-off against net profit. If the company projects good earnings and profits going forward then the goodwill write-off will come in handy for tax purposes.
My cursury look left me wondering why they paid so much. Awful lot of Goodwill baked in. But then again I'm not an accountant. That's just the feeling I walked away with. Tell me I'm wrong.
I just looked at Ruger's EPS for last two quarters (34 cents and 53 cents) so thie annual EPS run rate is below $2, which coupled with $52 share price would result in a P/E ratio above 25, unless we see a meaningful profit growth in the near future.
Based on its current EPS run rate (~15 cents per quarter), SWHC might end up in a similar P/E territory if performance doesn't improve - guidance will be very important.
Always my luck. Pulling out to early.
No biggy. I made some nice coin again from 9's and 10's.
I would be careful though if this keeps running. Earnings could be baked in.
I wouldn't count on a pull back before earnings. We only have three trading days until earnings, and with RGR flying today and SWHC expecting good earnings, I think we may see mid $14's before earnings and $15-$16 after earnings. You may have sold too early if you sold out today, which is the next leg up now. Good luck to all!!
I will re-enter once shorts are done covering and volume fades. At which point we should see a pull back. RSI pretty high right now.
That $15 is certainly possible....Earnings....final 3 announcement....Final defense contract.... increasing NICS....Battenfield contribution..... polymer contribution.....
EVERY qtr will be fun this year!