| SAN FRANCISCO
SAN FRANCISCO May 9 Shares of gun makers surged
on Tuesday after Sturm Ruger & Company Inc's quarterly
results suggested demand is recovering following a steep sales
drop after the election of Donald Trump as president.
Sturm Ruger shares jumped as much as 16 percent and were
still up 10 percent at $63.15 in afternoon trading. Shares of
Smith & Wesson's owner, American Outdoor Brands Corp,
were up 4.4 percent at $21.95. Vista Outdoor Inc, which
reports results for the March quarter on Thursday, were up 1.4
percent at $19.35.
The November election of Republican Trump, who opposes
regulations on gun ownership, abruptly undercut demand for guns
as people became less worried the government would curtail their
ability to purchase firearms.
Sturm Ruger's report late on Monday provided fresh
ammunition for investors arguing the industry is already on the
mend. Its stock has recovered about 30 percent since a
post-election sell-off hit bottom in mid-March, and Sturm Ruger
remains down just 2 percent from before the election.
"The prevailing sentiment at the moment appears to be that
industry sell-through patterns and retailer inventory destocking
trends should largely normalize by fall 2017," wrote Wunderlich
analyst Rommel Dionisio in a note following Sturm Ruger's
report. He raised his price target for Sturm Ruger to $62 from
The company's first-quarter revenue dipped 3 percent to
$167.4 million, better than some analysts expected. Earnings per
share were flat at $1.21.
Recent data on firearm background checks also hints at
stabilization. After a sharp post-election drop, background
checks in April were flat compared with April 2016, according to
the National Shooting Sports Foundation.
Sell-through of firearms from Sturm Ruger's distributors to
retailers fell 7 percent during the quarter, but at a lower rate
than the 11 percent drop in background checks during the
quarter, suggesting that Sturm Ruger gained market share.
Data on background checks is collected by the Federal Bureau
of Investigation and the NSSF adjusts it to remove checks for
conceal-carry permits so that it better reflects actual gun
In addition to guns and ammunition, Vista Outdoor sells
archery gear, bicycle helmets, scopes and other sports products.
It has been slammed by a wave of retail bankruptcies including
Sports Authority and Gander Mountain, which sold many of its
Vista Outdoor's shares have fallen by half since Jan. 11,
when it warned it expected an impairment charge due to a soft
(Editing by Matthew Lewis)