Says President O stimulating firearms sales with NSA phone tapping, IRS scandal, also Mayor Bloomberg anti-gun initiative. Says Ruger highly innovative company, spends more on new products than almost any company in the S+P, given its size. Implies that U.S. firearms sales surging again. Is top twenty institutional shareholder of Ruger.
Are the FTD statistics cumulative, or are they daily totals? For example, if there were 44,274 FTD's on 3/26/14 and only 353 FTD's on 3/28/14, does that mean delivery occurred but was two days late?
Seeking Alpha article was actually a hit piece against Ruger, using a Scott Hamann estimate to imply that Ruger is going to have 20% drop-off in earnings, unlike SWHC. .
$5 million share block after hours, 79,000 shares at $62.88. Probably illlorac spending his state income tax refund.
My Fidelity representative says shares can not be loaned from a retirement account, only a margin account. Also, he says there is no margin interest charge for the shorts, if Fidelity holds the shares in a client's account. If Fidelity needs to borrow shares from another broker, such a Schwab, then borrowing costs are incurred.
It seems likely to me that Ruger has begun repurchasing shares, beginning with the large block trade March 31. If SWHC is any guide, this should lead to a pretty good pop in the share price. Unlike SWHC, Ruger is using its abundant free cash flow, not borrowed money, as a source of funds.
EV of Ruger =$1.1 billion, nearly identical with market cap=$1.23 billion. Free cash flow for Ruger is pretty good, now they have the new factory fully paid for. Growth prospects are in the eye of the beholder.
Today it was reported in the WSJ that Blackstone Group was buying auto parts manufacturer Gates Global for $5.4 billion. Gates had EBIDTA of $560 million and revenue of $3 billion last year, so the buyout occurred at a multiple of 9.6x EBIDTA. Gates EBIDTA/revenue=18.6%
Compare with Ruger, which has a market capitalization of $1.23 billion, EBIDTA of $195.7 million, and revenue of $688 million. That means market cap is 6.3x EBIDTA, and EBIDTA/revenue=28.4%. To the casual observer, it appears that Ruger is much more attractively valued compared with Gates Global.
Remington management is very sparse on quarterly data, and it's difficult to see what accounts for the drop in revenues. They said you can't judge demand by sales growth, because they have a backlog in certain categories of unfulfilled orders. They also said demand is very strong:
"Our industry is continuing to experience strong demand for firearms and ammunition products. In late 2013, we began to see sales returning to more normalized levels in some categories, although demand is still above historical levels. The increase in demand has resulted in sales growth of over 30% in each of our firearms and ammunition segments during the year ended December 31, 2013 as compared to the year ended December 31, 2012. The year over year sales growth is not necessarily indicative of the increase in demand due to sales demand being greater than our current production capacity in many categories. As such, we continue to improve capacity with lean initiative, added shifts and additional capital investment."
Also, Remington sells directly to retailers, such as DKS and Wal-Mart, which may have reduced orders in the fourth quarter. Ruger and SWHC sell directly to wholesalers, and perhaps they had different purchasing patterns in Q4 compared with retailers.
Your NICS guess was closer than mine, but I had to publish my estimate first. For April I'll guess adj NICS checks at 2012 levels +3%, or 960,000.
What is more interesting than NICS for shareholders is Ruger financial results, namely revenues, income, balance sheet, and cash flow. Whether you're long or short, you need to estimate these numbers. Why don't we try to guess the financials for the first quarter? We'll see if we can best the 3 analysts who are often quoted on Yahoo Finance pages.
There is so much double counting in KY and NC NICS check data that the total figure reported by the FBI is losing its utility as a metric for firearm sales.
NSSF adj NICS vs. year-ago (surge period) comparisons are improving
March NICS checks were 2.48 million. However, the double-counting in North Carolina got even worse, so that there appears to be a 501,000 unit double-counting error. The double-counting in Kentucky is at least 200,000 units. Correcting for these two errors, I estimate that NSSF adj NICS checks were 1.35 million, stronger than February 2014, and stronger than March 2012 levels.
As part of my attempt to estimate earnings and cash flow results due May 5, 2014, I have created a table of capital expenditures and depreciation expenses.
Anyway, it appears that CAPEX will drop by $20 million during 2014, helping cash flow significantly. Depreciation will increase by about $7 million. I believe the excess cash flow will be applied to repurchasing shares.
I estimate revenues will be $182 million, same as Q4. Am still working on earnings estimates--depends on whether the gross margin in the first quarter is strong or weak. Usually, it's pretty strong.
Does anybody have any suggestions to help me figure this out?
Whichever institution sold the $10 million share block yesterday at the close has already lost $450,000, within a 12-hour time-span. . We will see who it was when the 13G's are filed May 15. I believe the buyer may have been Sturm Ruger. We will learn about that possibility in the earnings report at month's end.
I have to believe the trade was end-of-quarter window dressing. I assume the investment manager responsible will get a big bonus for this activity. In truth, he needs closer supervision.
I'm guessing that big block at the close was illlorac opening a new position.