Fear of gun rules spurs sales surge for Sturm Ruger
NEW YORK — Sturm Ruger & Co. posted the highest yearly profit since at least 1987 as fears of stricter gun regulation spurred record firearms demand.
Revenue at the gunmaker rose 50 percent to $ 491.8 million in 2012, the Southport, Conn.based manufacturer said Friday.
“The president has been the best gun salesman in the history of this country,” said Brian Rafn, director of research at Milwaukee-based Morgan Dempsey Capital Management. “You see people pushing shopping carts of ordnance out the door. I mean it’s like a grocery cart for Christmas. You’d think that they were going on some type of invasion.”
Sturm Ruger stock has gained 20 percent this year. The shares rose 2.1 percent to $54.61 at Thursday’s close in New York
On Friday, the company reported net income increased to $70.6 million, or $3.60 a share, in 2012 from about $40 million, or $2.09, a year earlier.
Sturm Ruger, t he second-largest publicly traded U. S. f irearmsmaker by sales, and rival Smith & Wesson Holding Corp. are benefiting from the re- election of President Barack Obama and his push to tighten gun laws after an elementary school massacre in Newtown, Conn. Buyers have increased purchases amid concerns that such laws will curb availability.
The surge in 2012 profit may not be sustainable, said Peter Zeuli, chief investment officer at Voorhees, N.J.-based Philadelphia Investment Partners.
“You’re going to see a more normalized growth rate,” Zeuli said. “When you book a sale, the sale is booked. Basically, that person is not going to buy again for a while. What’s the life expectancy of a gun or a pistol? It’s pretty long.”
Sales in the fourth quarter climbed to $141.8 million, the highest since at least 1990. The period included both Obama’s re-election and the Connecticut massacre, and the data help quantify just how lucrative the spike in gun demand has been for manufacturers.
Pre- purchase background checks hit a re- cord high in December, climbing almost 59 percent from a year earlier to 2.2 million, according to federal data adjusted by the Newtown-based National Shooting Sports Foundation to eliminate checks not related to sales. The previous record was set in November, the month Obama was re- elected, the industry group’s data show.
There were 13.8 million background checks in 2012, up 28 percent from 2011, according to the foundation. Sales growth at Sturm Ruger outpaced the jump in background checks on both an annual and quarterly basis, the company said Wednesday.
“The reason why gun sales expanded was because of what people thought — that there would be some more gun laws on the books and plus, people wanted to protect themselves,” Zeuli said. “It was an emotional purchase.”
After the Newtown shootings, the president proposed measures including universal background checks and banning military-style weapons sold by both Sturm Ruger and Smith & Wesson.