Mr. Fifer did not repurchase any shares in first quarter, even though price fell to $59. It might be best to wait until management begins repurchasing shares before plunging into this stock too deeply. You will know it by seeing the shares rise on heavy volume, in the absence of any news.
Mr. Fifer said in the May 5 shareholder letter that it would not be unusual for demand to drop off substantially after a surge like last year. SWHC guidance was pretty poor. It seems to me that SWHC scheduled an extra week of plant closing, that did not occur last year in the year-ago quarter.
Why do you saturate the message board with your postings? Hundreds of message per week, many of them off-topic....
I think sales from distributors to customers may have plunged, and SWHC has worked through all their backlog. It's difficult to prove this with the limited information we have available.
CAPEX in 2014 was a record amount, due to the purchase of Tritown Precision Plastics for $24 million, and $30.4 million invested in a new SAP system. Therefore, you can't really say CAPEX in 2014 was typical, and free cash flow in 2014 was not typical due to these one-time expenses. Management claims maintenance CAPEX is only $25 million.
As for the share repurchases, they were a stroke of genius. Management purchased 10.2 million shares at average cost of $11.3/share, and now the shares are at $15, so the profit on this transaction was about $3.7x10.2 million = $38 million. Share count is now about 10% less than before.
As for the fair valuation of SWHC and Ruger, it depends on the organic growth rate for firearms sales in the United States, and on margins. It's very difficult to estimate the sales growth rate right now due to (1) seasonal slowdown, and (2)surge comparison in 2013.
I thought the Motley Fool article was a pretty superficial piece, slapped together in haste. I'm not sure why Google posts Motley Fool articles as news stories.
SWHC plunged 11% after hours today, after guiding forward FY2015 revenue=$130 million and EPS=$0.23-25 for Q1, and $600 million revenue and $1.35 EPS for FY2015. Last year Q1 EPS was $0.41, revenue=$171 million, and FY2014 EPS=$1.49 and revenue=$626 million.
Mr. Debney said important factors for declining revenue and profits included declining demand for MSR's, seasonal summer slowdown, increased operating expense due to new software, and difficult comparisons with the surge. Backlog of orders was $230.4 million, or about one quarter of production.
It appears that Ruger's CEO. Michael Fifer was prudent to conserve cash, and avoid share buybacks at inflated prices in first half of 2014. Unlike SWHC, Ruger has plenty of cash, and no debt.
OK, I agree that Air Products management has been to tax management as Mickey Mantle was to baseball.
Note 22. Income Taxes [from 2013-10-K filing]
APD effective tax rate:
Do you think Mr. Seifi is going to redomicile APD out of the United States? A corporate inversion, to lower the corporate tax rate, would require the presence of another company, similar to Air Products, in Europe. or Canada which could be merged with APD.
New CEO is a star. He is 69 years old, not 68, according to the proxy filing. At Rockwood, he focused on maximizing value per share, not growing the business just for the sake of empire building. He likes rising dividends, buybacks, and minimizes long-term debt, He liquidated seven. underperforming divisions, and realized cash for them far in excess of book value, and used the money to pay down long term debt.
Rockwood presently has a market cap of $5 billion. Here is the shareholder equity for ROC:
I'm pretty sure at APD he will be liquidating divisions, paying down debt, and returning cash to shareholders. Shareholders will become rich.
APD may have been quiet for a few months, because Mr. Ackman is "busy" orchestrating inversions for Walgreen to Switzerland, and Allergan to Canada. Do you suppose APD, domiciled in Delaware, might become another corporate inversion?
CEO sells shares because of U.S. tax law, which prevents corporations from deducting large salaries, greater than $1 million for CEO's. Therefore, CEO takes salary as stock, which is more favorably treated. Naturally, television personalities and pro athletes are permitted to take multimillion salaries. It's strictly political.
Why are you bashing the stock?
Ruger still sells at a pretty low multiple of earnings, if we account for future growth. I estimate growth rate is probably 13% annually, based on EBITDA.
From the Q1 earnings release:
A summary of Q1 year-over-year growth follows:
Increase in estimated Ruger Units Sold from Distributors to Retailers
Perhaps the huge, new, Fidelity position in SWHC is pushing up its price. A few quarters ago, Fidelity wouldn't buy any firearms company. Now, they're in pretty deep.
Scott Hamann said May adj NICS came in below expectations. That's the sort of claim he could make every month, since he never publishes "expectations" for adj NICS in advance. We'll see how he does with his second quarter revenue and earnings estimate.....
NSSF adj NICS
May 2014 NSSF-Adjusted NICS Background Checks Second Highest May on Record
The May 2014 NSSF-adjusted National Instant Criminal Background Check System (NICS) figure of 877,655 is the second highest May on record for the system, even with a decrease of 9.9 percent compared to the May 2013 NSSF-adjusted NICS figure of 974,457. For comparison, the unadjusted May 2014 NICS figure of 1,476,318 reflects a 3.6 percent increase from the unadjusted NICS figure of 1,424,450 in May 2013.