Gun stocks fizzle on talk of slowing sales

Shares of Smith & Wesson and Sturm Ruger fell after an analyst report Wednesday, but overall gun sales remain higher for year.

By Bruce Kennedy Oct 3, 2012 3:06PM

 Men with toy guns --Leander Baerenz/Digital Vision/Getty ImagesShares of gun manufacturers retreated slightly Wednesday after a report suggested that handgun sales may have slowed last month.


Shares of Smith & Wesson (SWHC) and Sturm Ruger & Company (RGR) were down following word from Benchmark analyst Mike Greene that the number of adjusted FBI background checks for handgun sales grew by just 14.7% in September. That's down from growth of more than 20% in past months.


Those background checks, Greene told CNBC, are made at retail locations before a person purchases a firearm. "You can adjust those checks to remove concealed-carry permits and get a very good proxy for firearm sales," he said. "Just this past June they were up 24.5%, off of a very strong count for the year before as well."


Greene notes that overall firearms sales for the past six months are up more than 20%. In the case of Smith & Wesson, he said, a new management team has recently divested the perimeter security business to focus on the rapidly growing core firearms business.


He also pointed to three factors that are driving firearms sales:

  • Politics. "Before the election, people are buying firearms because they think that if re-elected, President Obama might go after more firearms regulation," he said.
  • Economy. There are concerns that crime rates might go up in a poor economy.
  • Female gun owners. Greene says there is a growing social acceptance of firearms for both self-defense and recreation -- especially among women. The rate of female firearms ownership has gone up "significantly" over the past several years.
Shares of Smith & Wesson were down more than 5% Wednesday to $10.32. Shares of Sturm Ruger were down more than 3% to $47.09.

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