About Sturm Ruger
We’ll admit it, guns and their applications and uses have been an inordinately hot topic recently in the United States and around the world.
For better or for worse, of course.
That being said, we are not going to even come close to falling into the trap of discussing our personal opinions regarding guns, as, first and foremost, it is not what we primarily talk about on our platform (we will stick with stocks, thank you very much) and we have no qualms in admitting that it is a very, very contentious topic of discussion that is so complex and all too close to some that we simply don’t feel comfortable or that it is really our place to interject our thoughts on certain matters related to guns, as everyone has their own opinions and perspectives and we hold the utmost respect for each individual’s perspectives on the matter.
That being said, we love discussing and analyzing companies and their respective stocks and Southport, Connecticut-headquartered Sturm Ruger just happens to be a publicly traded company that also happens to be one of the world’s most prominent, largest manufacturers of firearms, particularly well known for its inventory and line of rifles, revolvers and pistols.
Like it or not, this is just the reality of the business Ruger operates in, and we might add, the one that it has largely succeeded in over the years; selling guns.
We will also add that one of the things we initially do not like about the industry Sturm, Ruger operates in is the intense regulatory scrutiny it receives pretty much every waking moment of its existence.
We are not saying that this scrutiny is right or wrong, we are simply saying that having regulators constantly monitoring your activities can, at times, weigh heavily on a company’s share price and overall investor confidence.
Now, to step into some more familiar territory, it feels like a great time to comb through this company’s core financials and other relevant metrics and ratios so as to determine whether or not its stock (NYSE: RGR) is worth considering as a long-term investment, buying it now and holding onto it indefinitely.
Ruger’s stock financials
Trading at a share price of $52.41, Ruger is also accompanied by a market capitalization of $928.08 million, a prevailing price-to-earnings (P/E) ratio of 12.78 while also issuing an annual dividend of $1.62 to its shareholder base.
So far, so good, as this company’s share price (NYSE: RGR) appears to be modestly undervalued relative to its actual, intrinsic value given that it is commonly held that a price-to-earnings ratio of 20 indicates that a security is trading at exactly fair value and it follows that anything below that benchmark implies that it is undervalued.
Also, an annual dividend payout of nearly $2 annually hardly hurts.
Onto the state and overall condition of the company’s balance sheet, Ruger’s executive team is tasked with handling and managing just about $484.7 million in terms of total assets as well as approximately $168 million in terms of total liabilities, which is just another positive for this company’s stock (NYSE: RGR), since the company appears well capitalized and ready for the deepening of the current recession (if it should occur, which we unfortunately think it will), given that its total assets outweigh its total liabilities by a handsome amount.
With respect to the company’s income statement, Ruger’s total annual revenues have been, on average, trending upward over the last five years, however, it might be more accurate to say that it’s been more consistent and steady than anything.
For instance, in 2018 the company’s total annual revenues were marked as $496 million, $411 million the next year, $569 million the next year, $731 million in 2021 to its latest reported figure (displayed on TD Ameritrade’s platform) of $596 million, in 2022.
Clearly there have been some undulations in this company’s recent year-over-year (YOY) annual revenues, however, it can be noted that its revenues have remained rather resilient over this time frame, even amidst the prevalent and burdensome supply chain challenges and other headwinds facing industries across the board.
Onto the company’s cash flow statement, Ruger’s net income and, if you’ve kept up with our other recent stock analysis articles, you guessed it, its total cash from operations have also remained resilient, staying both positive and consistent during the same time frame (i.e., since 2018), which is honestly just something we expected from an established, scaled company such as Ruger, but it’s obviously a good thing, nevertheless.
Ruger’s stock fundamentals
Now onto the company’s ability to turn out a profit, let’s take a gander at its displayed (on TD Ameritrade’s platform) trailing twelve month (TTM) net profit margin.
Specifically, it is listed as 12.52% to the industry’s listed respective average of -0.16%, which is nothing short of fantastic, even for a company as well known as Ruger, as it has completely dominated the average of its peers in the arena of turning an annualized net profit margin that apparently comes as a perk of being a leader in the firearms space.
We are just happy to find that Ruger’s is where it should be; better than the industry’s overall average given its leadership position in the sector.
Additionally, Ruger’s TTM returns on both its assets and investments stand quite tall when put up against the competition’s averages, for instance, with its TTM return on assets pegged at 17.34% and the industry’s average of 2.47%, according to TD Ameritrade’s platform.
Another box checked.
Should you buy Sturm Ruger stock?
Although the general public and regulatory scrutiny faced by a company such as Ruger does scare us (objectively, solely in the context of being prospective shareholders), these objective figures are compelling, to say the least.
With total annual revenues remaining resilient for the most part since 2018, its TTM net profit margin and relevant return metrics standing tall against the average of its competitors, a nice quarterly dividend payout, its shares (NYSE: RGR) apparently trading below fair value at the time of this writing and operating in a recession resistant industry, there isn’t much to dislike about Ruger’s stock by itself.
Of course, this is sort of a special instance and one should consider their own personal opinion(s) on firearms and factor that into their ultimate consideration and/or decisions regarding putting some of their own money behind this company.
That is not our place to say, but yours.
All things considered, however, from a numbers standpoint alone, it makes the most sense if we give this company’s stock (NYSE: RGR) a “buy” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.