Sturm, Ruger & Company (NYSE:RGR)

CAPS Rating: 4 out of 5

The Company is principally engaged in the design, manufacture, and sale of firearms and precision investment castings. The Company's design and manufacturing operations are located in the United States.

Recs

0
Player Avatar warrenout (98.84) Submitted: 11/7/2012 12:56:00 PM : Underperform Start Price: $47.24 RGR Score: -24.07

Current valuation is way over the top.

Report this Post 3 Replies
Member Avatar JohnCLeven (81.45) Submitted: 11/9/2012 1:18:20 PM
Recs: 0

Hello
I’m a young, n00b investor, and I was wondering if you could tell me a bit about how you concluded that RGR is overvalued?

To a n00b like me, RGR looks like a robustly growing company, w/ extraordinary returns on capital and on assets, zero debt, and a 3% yield. The P/E of 16 and the price/Graham number of 1.9 seem reasonable for a company of this quality. I do see that both RGR’s p/s and p/b are above historical averages, but then again so is the level of growth this company is seeing.
Perhaps you’re making a call based on the unsustainability of RGR’s recent growth and too high expectations for the future? If not, could you enlighten me on your thought process for the down thumb?

Again, I’m still very new at this and am just trying to learn as much as I can.

Thanks for the feedback, I really appreciate it!

Member Avatar warrenout (98.84) Submitted: 11/21/2012 10:54:35 AM
Recs: 0

Sorry it has taken so long to respond. I didn't notice your reply until today.

I was making a call on the the two small-gun stocks, SWHC and RGR. The date was 11/7, and subsequently I closed SWHC with a 6.99 point gain, and am sittin on an 11.74 point loss on RGR. Basically, RGR is a great company, but it's overvalued in my opinion, and it will take a major hit in the next two weeks. A special Dividend of $4.50 per share will be paid to shareholders of record on December 7. Look for the stock to drop significanlty on December 8.

Without the announcement of the special div, the stock would have leveled a bit by now. I look for the stock to drop to from $40 to $42 by the end of the year. Please note that the short interest is currently a staggering 43.5% of the float. Sometimes the shorts are wrong, but generally short money is smart money... Good luck to you.

Member Avatar warrenout (98.84) Submitted: 11/21/2012 11:00:41 AM
Recs: 0

Sorry it has taken so long to respond. I didn't notice your reply until today.

I was making a call on the the two small-gun stocks, SWHC and RGR. The date was 11/7, and subsequently I closed SWHC with a 6.99 point gain, and am sittin on an 11.74 point loss on RGR. Basically, RGR is a great company, but it's overvalued in my opinion, and it will take a major hit in the next two weeks. A special Dividend of $4.50 per share will be paid to shareholders of record on December 7. Look for the stock to drop significanlty on December 8.

Without the announcement of the special div, the stock would have leveled a bit by now. I look for the stock to drop to from $40 to $42 by the end of the year. Please note that the short interest is currently a staggering 43.5% of the float. Sometimes the shorts are wrong, but generally short money is smart money... Good luck to you.

Featured Broker Partners


Advertisement