Are Obama's policies driving gun sales?
Firearms sales surged in 2013, but there are signs that demand is starting to wane.
Gun ownership remains a heavily debated topic in society, but one thing that can't be argued are the facts.
For the most part, President Obama largely stayed clear of the gun debate during his first term but took a tougher stance after 20 children and six adults were murdered at Sandy Hook Elementary School in December 2012.
Obama pressed unsuccessfully for stricter federal gun controls following the massacre, which led to a surge in gun sales as consumers may have felt a need to rush out and make purchases in the event that stricter gun control initiatives were brought in to law.
"Obama is the stimulus package for the firearms industry,” Dave Workman, senior editor of Gun Mag, a print and online publication of the 2nd Amendment Foundation, a gun-ownership rights group, told Bloomberg. "The greatest irony of the Obama administration is that the one industry that he may not have really liked to see healthy has become the healthiest industry in the United States."
According to FBI data quoted by Bloomberg, the firearm industry saw a solid 2013 with more than 21 million background checks for firearm sales performed, up from 19.6 million in 2012 and 16.45 million in 2011.
Investors need to look no further than gun manufacturers as evidence that gun sales are strong. More importantly, investors are looking for reassurance that demand will remain strong over time.
Sturm, Ruger & Company: Rare profit miss, sign of declining demand?
On Feb. 25, Sturm, Ruger & Company (RGR) reported that its fourth-quarter results fell short of analyst expectations. The company earned $1.33 per share, missing the consensus estimate of $1.38. Revenue of $181.9 million beat the consensus estimate of $179.15 million.
Investors were shocked as the company missed its earnings estimate for the first time in four years despite orders up "significantly" over 2012.
As a major gun manufacturer, investors began questioning if media reports of surging gun sales are accurate given the fact that Sturm, Ruger & Company, the largest publicly traded U.S. firearms maker just disappointed Wall Street with an earnings miss.
On March 4, Smith & Wesson (SWHC) reported that's third-quarter earnings of $0.35 had topped the consensus estimate by six cents. However, revenue of $145.9 million fell short of analyst expectations by $6.8 million.
Lake Street: Smith & Wesson well positioned with minimal downside risk
Chris Krueger, analyst at Lake Street Capital Markets wrote in a note to clients on March 5 that Smith & Wesson's quarterly results were strong driven by a strength in sales of handguns which grew 30 percent to $100.9 million and represented 69 percent of total sales. In fact, Krueger noted that handgun sales are growing at a faster pace than the FBI NICS background checks.
The company recently introduced new revolvers which received "a strong reception" and being a market leader should allow the company to gain further market share "if consumers shift attention towards the revolver category."
Looking forward, Krueger hypothesized that the company will continue to expand its product offering and innovate in the category and can grow sales at a 10 percent rate and earnings in a range of 10 percent to 15 percent over the next five years.
The industry is enjoying a strong growth rate and expanded at "an accelerated rate" as new participants enter (such as women) and many repeat firearm purchases have occurred.
Shares are Buy rated with an $18 price target.
Risks associated with gun manufacturers
Naturally, the gun industry is full of risks outside of the political and regulatory sphere. Companies in the firearms industry are typically involved with numerous lawsuits or have to deal with product defects and/or safety issues and need to recall the products. Additionally, the loss of one key customer could have a drastic effect on profitability.
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Wow, you guys are right on top of it aren't you? Gee whiz.
Obama stated he wanted a national police force that would be equally equipped as the military, why would he want that?
An armed citizen is a respected citizen.
Odumbo doesn't realize the results of his actions, what he thinks is his power and privilege is soon revealed as back firing on him, look at the Affordable Health Care Act. He is crippling people from heathcare and iit is far from affordable.
He has no idea of leadership, he is only a community organizer that fooled most minorities in th US and they are still waiting for their free handouts.
If the country wasn't run by a dictator and limp wristed liberals we wouldn't have a shortage of ammo and gun sales would be normal. The way this country is going I wouldn't be surprised if there is a revolution / coup soon especially if Hillary gets elected.
Obama and his bunch are scared of folks getting armed and should be. The limp wristed population say we do not need guns but if this country falls and things go to hell then they will be wondering how to get food. I will love to have some gay liberal come and ask me for some meat from the deer or rabbit I shot for food if this happens. There will be a lot of antigun people starving if things go belly up.
Obama is an idiot, it should be a requirment to own a firearm or two or three, i will guarntee you that with this moron in office the people that wrote the constitution would already have taken some type of action against this communist moron.
obamas threats to putin are a joke as well, putin thinks obama is gay, what is obama going to do have sex in a foxhole with his buddy. I am quite sure that putin is laughing his butt off at obama and his attempt to be a sincere and serious leader. our piehole president cannot be taken serioiusly being a gay moron as he is it would be nice if he would stop embarassing the usa and leave office and let a man run the country,
now back to the guns, every citizen should own one, be warned if we lay down our guns, we all will be wearing the same clothes just like they do in north korea.
keep and bare arms shall not be infringed, That means all weapons no matter, assult rifle, pistol, shotgun, bb gun, machine guns, semi autos, any and all of them,
the infringments that are in place now, are all criminal in their intent, it is a violation of the constitution period. obama knows it yet keeps trying to overthrow it.
obama is a devil in a three peice suit.
Gun sales will continue to go up for years to come as long "I've been hit in the face with a shovel" Hilary stays in the news about running in the next election.
Keep buying those guns and ammo we are probably going to need them if we want to get our country back.
Obama is the greatest sales person the gun industry has ever had. When you hear a socialist like Obama spouting off his illiterate mouth it scares those of us that believe in this country and the Constitution. Obviously, Obama and his band of thieves feels the Constitution is just a bunch of suggestions. For example, just a few days ago, Obama's buddy Durbin questioned the right of free speech and wondered if it applied to everyone.
I'm purchasing two more guns this year, a Remington shotgun and a Glock semi-automatic .38
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