I cannot find fault with any of your arguments. If SWHC executes as you describe the stock deserves to be higher. One thing that always worried me a little is there lifetime warranty.... I know quite a few guys that use M&P pro series for 3 gun and other combat type shooting. These guys are all over the country. Some go through thousands of rounds a month without batting an eye.... I really don't know how these guns can hold up to this forever ... Now the typical home defense gun may only have a few hundred rounds fired through it and then locked in the nightstand vault, but shooting sports are on the rise and these gun get much more use than most "hunting" weapons of the days of old (with the possible exception of a wealthy guy on a pheasant farm. lol... I don't know if you are old enough to remember back in the eàrly 70s when Chrysler initiated the 100k mile drivetrain warrant to increase sales. It pretty much bankrupted the company. I do have a concern that a lifetime warranty on a pistol (especially with a polymer frame) may pose some issues down the road. If it were up to me, I would have a 3-5 year warranty. Long enough to instill confidence in the product, but not an open end liability. I really don't think the lifetime warrant stimulates as many additional sales to warrant the exposure it presents to SWHC. What do you think?
Just $10 a month from each of the 5 million NRA members nets $600 million or a 12 to 1 advantage over the Progressive #$%$ Bloomberg for the good guys!
SWHCs sales strategy is much different than competitors and is designed to keep pricing controlled to the final buyer and eliminate gouging that goes on when you offer the incentive to the distributor/retailer, rather than the consumer. This is important as SWHC can keep its pricing low and maintain volume to keep its factories running.... all contributing to higher margins.
Additional comment, the Shield is simply an incredible value for the price. As I noted before, in my comparison drive of recent times, the Shield and M&P do have as good or better quality perception than that of Glock (the Austrian word for THICK), Ruger (not really in the CC/compact pistol running in my book). The only serious contender I see to M&P/Shield is Springfield who has simply an impressive collection, but PRICE POINTS are high.
So, with buying the polymer frame builder and continuing their strategy on pricing, they can maintain or improve margins going forward. The Polymer frame acquisition should add to margin pretty quickly.
Now, maintenance capex $10MM, $14MM, $12MM, $13MM... for the past four quarters. They have added machinery that makes their mfg more flexible. Truth be told, I think RUGER is facing higher levels of M and Growth capex going forward as they try to catch up on pistols. I see SHWCs capex actually declining to some degree, certainly not pitching up.
There is little doubt that SWHC sales will continue be strong and a very good chance they will continue to increase. I'd go a step farther and say the odds favor that SWHC will continue to grow its earnings. Looking at the great performance to date, it can be argued the stock price undervalues the companies true worth. The key to the puzzle IMO is where their free cash flow is going. If SWHC can keep their capex in check and maintain their high net margins this stock is truly undervalued. Many believe it's all about the misconception that gun sales have peaked. I disagree. Gun sales for SWHC HAVE NOT PEAKED. I don't think the smart money believes SWHC gun sales have peaked. I do think there is a question about maintaining 40% + margins going forward. I'm not forecasting they won't keep those margins. I'm just expressing my opinion about what the real factor is in where the stock price is going. Keep your eye on free cash flow going forward. There is a second overriding factor of course....will SWHC BE TAKEN OUT? This would obviously make my earlier statement moot, since the buyout price would have be a minimum of 25-30% higher than current levels. Since I rarely (read never) buy or hold a stock on takeover possibilities, it isn't a factor in MY decisions.
I wholeheartedly agree that this industry is significantly impacted by politics. However, I see a huge difference between discussing the direct impact of politics on the firearms market and venting one's personal ideological opinions and frustrations on an this message board.
Politics plays an important part in a stock like SWHC when you have a dangerously incompetent and idealistic narcissist in such a key position, as we have today with Obama and his highly crony organization. Their attempts to get what they want via subversion and destabilization has resulted in an interesting environment for certain "target" industries, and has provided incredible buying opportunities for those who have recognized them. Target industries such has guns and those responsible for fracking technology have seen awesome gains the last few years, coupled with many buying opportunities (rgr, swhc, bhi, hal, slb).
On the world stage, Obamas adventurism has consistently provided disastrous failures (Libya, Egypt, Syria, Ukraine) and may yet veer us into a major war, with it's incredible monetary and human costs, not to mention the risk and uncertainty. The fact that he was awarded the Nobel Peace Prize on the come should give anyone pause regarding the intelligence of our species in general, and should also play into investment decisions to one degree or another.
So, although I agree that sometimes the discussions stray quite a bit, IMHO politics should very much be part of the current investment decision environment, and more so with a stock like SWHC.
SWHC is worth $14.35 (the price at the time when I'm writing it). I don't know why, or whether at all, ATK hasn't sent LOI. Are you sure they haven't? Also, I'd think they'd probably send an IOI before submitting and LOI.
You first. Lets talk about what you think SWHC is worth, and why. And why ATK hasn't sent an LOI to the board of directors yet.
It appears to me that over the past few days the SWHC message board turned into a political forum with several threads in which people appear to be venting their frustrations with those who don't support all their ideological views. Can we get back to to relevant stuff?
I certainly don't claim to have all the details on who has the higher legal ground (no pun intended) in the land use dispute in Nevada. I can certainly see Bundy's position that his family has been using the land for generations and there is a legal principle called "easement by adverse possession".... Yet it seems reasonable that the Feds be collecting a reasonable "lease payment" for the use of their land. The thing that seems abundantly clear in this case from the outcome thus far is that if you have a dispute with the federal government you'll probably get better results if you bring your AR15 armed friends than your lawyers.
This is exactly why guns sales will continue strong for years to come, and why the libs and shorts still don't grasp it. Because they fail to understand the mind set of gun owners, and keep falling back on a one-off, six sigma event and using that as a data point to compare ALL sales comps against.
There's one way to defend against Gloomterd's assault on arguably our greatest guarantee against the tyranny of an out of control federal government ....... MONEY.....he is pledging 50 mil and will be joined with the likes of Warren Buffet (I have to believe George Soros)..and other big libs(you can believe there will be a long list of Hollywood mogols).. Their goal is to destroy the influence of the NRA....I've talked to many hunters from the UK and Autralia over the years. One common thing I heard over and over. The only reason we still have gun rights in the USA in their opinion is the NRA... They have no such organization in their countries and when the liberals got control of government over there, they steamrolled right over gun rights. Once they are lost, we'll never get them back....MAKE OUT A CHECK TO THE NRA TODAY AND PROUDLY WEAR THE NRA EMBLEM. GIRLS, that means you too....
You just can't get better enemies than these guys! He will be on every GOP commercial this fall in red states, which will lead to another surge in gun sales. Buying more tomorrow.
Another example of Cerberus buying a company, stripping all the cash out of it while letting it rot to death by not reinvesting back enough into new equipment and R&D. IMO Cerberus is about as bad as it gets when it comes to "private capital". Hopefully they get rid of it before it completely implodes......at some point it would not surprise me if it would file bankruptcy, and then reorganize and go public again. Some of my favorite rifles are Rem 700 BDL Varminters. A 22-250, .243 and a 7mm-08. All three early 1980 guns shoot 1/2 MOA 5 shot groups with fire formed neck sized hand loads.....can't speak to what they are putting out these days but I'd hate to see the brand disappear.