Shares of Sturm Ruger & Co. Inc. (NYSE: RGR) plunged as its sales in the most recently reported quarter fell off a cliff. What the drop says about gun demand in the United States is hard to tell.
The stock fell 15% after the company disclosed that sales had collapsed. Management reported in a Securities and Exchange Commission filing that:
Sturm, Ruger & Company, Inc. announced today that for 2017 the Company reported net sales of $522.3 million and diluted earnings of $2.91 per share, compared with net sales of $664.3 million and diluted earnings of $4.59 per share in 2016.
Gun demand was not the only aspect of the company’s operations blamed for the disaster:
Decreased overall consumer demand in 2017 due to stronger-than-normal demand during most of 2016, likely bolstered by the political campaigns for the November 2016 elections,
Reduced purchasing by retailers in an effort to reduce their inventories and generate cash,
Aggressive price discounting and lucrative consumer rebates offered by many of our competitors, and
Excess industry manufacturing capacity, which exacerbated the above factors.
However, the election of President Trump and his lack of a gun policy had an effect on the company’s results, at least as management sees the problem.
Sturm Ruger shares are off 15% this year to $47.30. This is down from a 52-week high of $68.80 and against a 52-week low of $44.80. Worse-than-expected earnings have been part of the problem. Based on gun sales trends, the problem could get worse.