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Sturm, Ruger & Co. Inc. Message Board

katieholmes8561 1 post  |  Last Activity: Jul 29, 2014 6:19 PM Member since: Jan 23, 2013
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  • katieholmes8561 by katieholmes8561 Jul 29, 2014 6:19 PM Flag

    The Q2 earnings results are going to make some investors pretty nervous. I get the feeling we small-fry investors will have the opportunity to purchase shares at extremely low price levels in the coming months.

    Units produced were 555,200, whereas units ordered were only 145,200. This disparity can't be sustained for long---it depends on the backlog, which dropped from 1.35 million units March 31, to 0.986 million units June 30. Soon, the backlog will disappear.

    Orders were by far the lowest in six quarters.

    Weighted average number of shares outstanding increased from 19.84 million to 19.94 million in the last 12 months. There were no share repurchases.

    Cash flow was slightly negative, so that cash and cash equivalents was $49.7 million March 31, and 47.4 million June 30.

    Employee compensation decreased from $14.4 million in Q1, to $12.7 million in Q2.

    Operating margin was 21.6% versus 28.3% in year ago quarter. CAPEX was $22.8 million for 6 months, versus year-ago CAPEX of $18.8 million.

    The main problem for Ruger is that earnings are going to drop down to a much lower level, once the backlog is exhausted.

    The question we need to ask ourselves is, what is the level of normalized earnings, when units shipped are equal to units ordered? Difficult for me to answer. Maybe vkncaa was right after all--this company is not really a growth company, but is a cyclical.

    What can Mr. Fifer do? Perhaps a corporate inversion to Switzerland. I don't imagine he's going to repurchase any shares until the stock hits the floor, which I believe is far below $57/share.

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