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What Will Happen to Sturm, Ruger in 2013?

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As 2013 begins, now's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Sturm, Ruger (NYSE: RGR  ) . The gunmaker saw its shares rise sharply in 2012 as sales demand soared. But the recent tragedy in Connecticut has renewed calls for gun control that could hurt Sturm, Ruger's business. Below, you'll learn more about Sturm, Ruger's prospects for 2013.

Stats on Sturm, Ruger

Average Stock Target Price


Full-Year 2012 EPS Estimate


Full-Year 2013 EPS Estimate


Full-Year 2012 Sales Growth Estimate


Full-Year 2013 Sales Growth Estimate


Forward P/E


Source: Yahoo! Finance.

Will Sturm, Ruger rise or fall in 2013?
Analysts foresee some tough times ahead for Sturm, Ruger. After a strong gain in revenue, 2013 sales are expected to flatten out, and the target stock price is just 5% above its current level.

From a business perspective, Sturm, Ruger's success shows few signs of stopping. Both it and Smith & Wesson (NASDAQ: SWHC  ) should benefit from a nearly 20% rise in background checks in 2012 compared with last year, and that growth has accelerated in recent months with the re-election of President Obama and fear of tighter restrictions on future gun sales.

But the Newtown shootings promise a vigorous response from gun-control proponents, and as Sturm, Ruger's shares have fallen, those of non-lethal weapon producer TASER (NASDAQ: TASR  ) have risen on expectations of higher orders. Still, even if gun legislation gets through the highly politicized Congressional process, it would probably face years of court battles before it could take effect. All the while, increased threats of a ban would accelerate demand, potentially leading to the same bottlenecks we saw earlier this year, when Ruger had to stop taking orders so it could catch up with its backlog.

For Sturm, Ruger, much of its 2013 success may rely on what retailers decide to do with their gun-sales policies. If moves from Dick's Sporting Goods (NYSE: DKS  ) to suspend certain gun sales spread to major retailer Wal-Mart (NYSE: WMT  ) and others, then it could lead to future problems. But at least for now, the panic in Sturm, Ruger shares seems unfounded, and despite analysts' reluctance to weigh in, the stock could easily move back toward previous highs in 2013.

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Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 07, 2013, at 2:01 PM, virg461 wrote:

    It's always interesting when those that don't understand firearms and don't shoot write articles about gunmakers. Ruger actually derives a fairly small amount of revenue from the types of firearms that a potential ban would impact. The SR-556 is a nice rifle, but it's piston driven vs. direct impinged and has not really a huge player in the AR-15 market. Ruger's sales increases over the last few years are much more due to their small pistol offerings and the recent trend of more and more concealed carry permits. I don't see that trend decreasing. On top of that, I have a very hard time seeing a path through the House of Representatives for Feinstein's bill.

  • Report this Comment On January 07, 2013, at 4:21 PM, Real1tyCheck wrote:

    Have you visted a gun shop or a Cabellas lately? If the crowds waiting to buy guns at Cabellas are any indication (you have to take a number and wait and wait), RGR is going to blow away their guidance.

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