Net sales and EPS performance in 2015 and 2016
Sturm Ruger (RGR) is a domestic designer, manufacturer, and seller of firearms. The company’s net sales jumped 21% in 2016 compared to 1% in 2015, offset by higher costs. Firearms sales drove the company’s growth, which was offset by a slowdown in castings sales in 2016.
The above factors led to 28% growth in gross profit in 2016 after growth of just 2% in 2015. Operating income rose 42% in 2016 compared to 68% in 2015. The difference was due to a rise in operating expenses in 2016 after a drop in 2015. The company’s interest expenses have risen gradually over the years. These factors translated into 43% growth in 2016 compared to 65% in 2015. Share buybacks further enhanced the EPS numbers.
Net sales and EPS performance in 1H17
Sturm Ruger saw a 12% decline in its net sales for 1H17. Both the segments contributed to the decline in sales, which was further supported by lower costs, which led to a drop of 22% in gross profit. Operating income fell 32% due to the above factors and a decline in operating expenses. Interest expenses also fell during the period. The company’s EPS fell 27% during the period, offset by share buybacks.
The company cut dividends in 2017. However, it still has a 3.1% dividend yield, as prices have dropped 5.7% on a YTD basis. In comparison, the Dow Jones Industrial Average (DJIA-INDEX) (DIA) has a dividend yield of 2.3% and YTD price gains of 15.7%. The S&P 500 (SPX-INDEX) (SPY) has a dividend yield of 2.3% and YTD price gains of 14%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has YTD price gains of 22.7%. Sturm Ruger generated enough free cash flow in 2015 and 2016 to pay off its dividends.