Sturm, Ruger & Company, Inc. (RGR) has a lot going for it. After the last quarterly surprise, estimates are once again on the rise and not projecting solid growth rates. On top of that a steady dividend and a Zacks #1 Rank (Strong Buy) make RGR worth a look.
Company Description
Sturm, Ruger makes firearms for the commercial sporting market in the U.S. Products include rifles, pistols, shotguns, and accessories. The company also makes steel alloy castings for commercial, sporting goods, and military customers.
Another Nice Surprise
On Nov 2 Sturm, Ruger reported a 38% increase in the top line, to $80.5 million. By the time the money worked its way to the bottom line it was at a better-than-expected $0.57 per share, which was a 78% increase.
Analysts polled by Zacks were looking for $0.40, giving Sturm, Ruger its eighth consecutive earnings surprise.
Demand has been increasing for the company, but the industry should keep doing well also. Applications for background checks were up 12% during Q3, meaning demand should continue to climb over the next few periods.
Bullish Revisions
After the earnings release, earrings estimates were moving higher in unison. The Zacks Consensus Estimate for this year jumped 20 cents, to $1.92.
Next year’s forecasts are up 17 cents on average, to $2.10. Given the $1.46 that Sturm, Ruger earned in 2010, projected growth rates are at 32% and 10%, respectively.
Solid Dividend
Shareholders can pick up a 1.8% dividend yield and won’t have to break the bank. The stock is going for 15 times next year’s estimates, which on the lower end of RGR’s historical range.
Great Trend
Consistent earnings growth is essential for a stock to move higher, not to mention paying and raising the dividends. Below you can see the excellent track record for RGR.
Each colored line below is a particular year’s consensus estimate. You can seen the are climbing both year over year, but more importantly, moving higher throughout the year.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
