Sturm, Ruger & Company (RGR): As Good as They Come

Page 1 of 2

Sturm, Ruger & Company (RGR)Shareholders in gun manufacturer Sturm, Ruger & Company (NYSE:RGR) have benefited greatly from the recent surge in gun demand driven by gun control and crime rate fears. Its stock price increased 45% over the past year beating the S&P 500 (see chart below). Looking at Ruger from the standpoint of strengths, weaknesses, opportunities, and threats should help you understand the direction of this company.

RGR Total Return Price data by YCharts

Strengths

Focused management – The keen focus of Ruger’s management drives this company. Ruger’s CEO Michael Fifer owns approximately 1.3% of the company’s stock, which incentivizes some of the focus.

Fifer’s focus on accurate production planning shows with his focus on the “sell-through” rate or the rate of sales from the distributor to the retailer. Backlog showed an astronomical rise in the gun industry and he feels that the sell-through rate provides a more accurate picture of industry fundamentals. This line of reasoning stems from industry-wide over-ordering from distributors due to fear of lost sales opportunity because of a low supply of finished goods. Ruger’s sell-through rate increased 63% in 2012.

In their latest earnings calls weapons makers discussed the vast expansion of backlog. Ruger’s backlog more than doubled to 1.5 million units in 2012. Rival gun manufacturer Smith & Wesson Holding Corporation (NASDAQ:SWHC) saw its backlog triple so far. Winchester, the ammunitions arm of chemical company Olin Corporation (NYSE:OLN), saw its backlog increase by a factor of ten in 2012.

Ruger’s management demonstrates remarkable ability to maximize production for every capital expenditure dollar. According to Ruger’s last earnings call, a 7% increase in capital equipment base led to a 52% increase in unit production.

Strong brand – Ruger represents a well-recognized brand name with a rich history. This also serves as a barrier to entry. Someone new can manufacture a gun, but it won’t possess the Ruger name.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!