NICS checks in the first quarter increased 9.7% compared with the fourth quarter, from 6.4 mn to 7.0 million. We can estimate that RGR's revenue increased by 9.7%, if it could increase unit production as fast as the NICS checks. Assuming a 5% price increase, revenue may have increased as much as 14.7% quarter on quarter.
The worst case scenario is the price increases in January did not apply to January sales due to the backlog, resulting in an effective price increase in January of 0%. Also, if Ruger production was frozen due to lack of excess capacity, the revenue increase would be 0%.
Using these two scenarios, we get estimated Q1 revenue between $141 million and $162 million, and estimated net income between $19.8 million and $22.7 million, and estimated EPS between $1.00 and $1.15,
Using the midpoint, EPS=$1.08 per share, gets me to the analyst high estimate, well above the consensus. Revenue estimate is the midpoint, or $151 million, well above consensus.
Your effort at precision is admirable. However, its application to prediction of quarterly earnings is probably close to futile. Any management can massage earnings by shuffling some expenses and even some revenues between quarters. You could not make a meaningful prediction unless you knew what shuffling has been done previously and what shuffling was being done for the quarter being reported.
I question your implication that they shuffle revenue between quarters. Also, what was at the heart of our analysis is the Adj. NICS Growth figures, which you seem to be sidestepping. Do you deny that there is some correlation between these figures and Sales Revenues for the Gun Companies? This is an EXTREME disconnect between what the analysts are predicting and reality. I notice you didn't comment at all on my thread below where I laid all the data out for each quarter, which makes this PAINFULLY OBVIOUS.
I got something similar but I used the Adj. NICS, instead of non-Adj. That gives a first Quarter increase of only 0.9% (instead of your 9.7%) compared with the fourth quarter. That would give a Q1 Rev est. of $143M, assuming no price increases accretive to RGR yet. Then I looked at it on a seasonal, ie. year over year basis where I used the +45.9% Adj. NICS Growth compared to Q1 '12. This gives a Q1 Rev est. of $164M. This is conservative since RGR has beaten the YoY Adj NICS Growth for the last 7 quarters in a row, but the degree to which it has beaten it has started to decrease somewhat, especially in the most recent quarter, so assuming that the two numbers have now converged is conservative.
So, depending upon which scenario you choose you get Rev Growth of between +27.3% and +45.9%, vs the analysts est. avg. of +17.2%. I think RGR could easily come in above the 45.9%, like maybe +50%. Anyway you slice it, they are going to beat the estimates by a hefty amount.
This also assumes that they did not shift their production somewhat towards higher margin products like the SR556 and mini-14 to take advantage of the increased demand for those due to fears of a Finklestein AWB.
The next question is, what should be a proper P/E for the stock? In determining that, it would only be fair to properly award it a multiple in keeping with its growth. Right now, it is only about commensurate with the avg. P/E of the overall market, which has very little revenue growth. That is ridiculous. There is no question in my mind that certain analysts (Hamann, Dionisio) have been on a mission to compress RGR's multiple and keep it from advancing.
I like the way you think - anyone using call options to create a play around earnings?
I am out of RGR right now because I cant figure out why the market reacts like it does with RGR being such a solid compnay and selling everything it makes - I have made money on RGR using options but it is not my area of expertise