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Sturm, Ruger & Company (RGR) Repurchases Shares Worth $11.3M


Sturm, Ruger & Company, Inc. RGR announced the repurchasing of 243,423 shares of its common stock at an average price $46.33 per share.

Through exercise of share repurchase the company repurchased shares worth $11.3 million in third quarter. Repurchase of shares were funded with cash on hand, and constituted approximately 1.4% of the outstanding shares as of July 1, 2017.

Benefits from Repurchase

Technically share repurchases benefit the company’s earnings per share, and book value as outstanding shares decrease. Notably, the decision to buyback shares reflects the company’s aim to increase shareholder value.

In April, the company announced that it had repurchased shares worth $53.4 million in first quarter of 2017, which lowered its share repurchase authorization to $5.5 million.

In May, its Board of Directors had raised its authorization to repurchase shares of its common stock to $100 million. Post the share repurchase in third quarter, $88.7 million is still available for further repurchase.

New Offerings

New products represented $84.9 million or 29% of firearm sales in the first half of 2017. In 2017, new products include the Mark IV pistols, Precision Rifle and LCP II pistol. During the second quarter, the company launchedthe LCRX 8 shot 22 caliber revolver, the LCP II viridian laser, the Silent SR1022 Takedown, the SP101 Mach Champion and the SR1911 in 10 millimeter.

We expect these new offerings along with existing products to continue to boost the top line and help generate surplus funds for further share buybacks.

Price Movement

In the last one month, Sturm, Ruger & Company's shares have gained 13.3% against the industry’s gain of 9.1%.

In addition to the share repurchase program, the company’s stock witnessed a sharp gain over other U.S. gun stocks in the same space following the Las Vegas incident. Gun sales usually rise over concerns among customers that such violent events may lead to more stringent gun-control legislation. Additionally, customers tend to buy guns to defend themselves in anticipation of more such attacks in future.

Zacks Rank & Other Stocks

Sturm, Ruger & Company currently carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks from the broader sector are G-III Apparel Group, LTD. GIII, China Lodging Group, Limited HTHT and Malibu Boats, Inc. MBUU,all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

G-III Apparel delivered an average surprise of 3.5% in the trailing four quarters. Its 2017 estimates have risen by 7.1% to $1.36 per share in the last 90 days.

China Lodging Group delivered an average surprise of 33.7% in the trailing four quarters. Its 2017 estimates rose by 49.1% to $3.19 per share in the last 90 days.

Malibu Boats delivered an average surprise of 6% in the trailing four quarters. Its 2017 estimates rose by 3.9% to $1.87 per share in the last 90 days.

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