A Foolish Take: What's Next for America's Top Gunmakers?
There are only two publicly traded gunmakers in America:American Outdoor Brands (NASDAQ: AOBC) (formerly known as Smith & Wesson) and Sturm, Ruger & Company (NYSE: RGR). Today, we're examining each company's revenue over the past four years, as well as estimates for 2017.
Gun sales don't consistently rise. Instead, they're influenced by current events and politics. NICS background checks for firearm purchases -- the key gauge of gun demand -- generally rise after mass shootings and Democratic proposals of tougher gun regulations, and fall when Republicans are in power.
Data source: Financial Times. Chart created by author.
American Outdoor has been diversifying into adjacent markets like laser sights, accessories, and knives to reduce its dependence on firearms. That's why its sales are expected to rise this year, while Sturm, Ruger's revenue -- which depends entirely on guns -- is expected to decline. However, American Outdoor remains more exposed to potential assault weapon bans than Sturm, Ruger, which sells more pistols, single-shot rifles, and shotguns.
NICS background checks have declined annually for five straight months now, so investors should brace for tough year-over-year comparisons over the next few quarters. But neither gunmaker is likely to fade away. Instead, they'll probably continue diversifying their core businesses away from firearms and controversial assault weapons.
Offer from The Motley Fool: The 10 best stocks to buy nowMotley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. In fact, the newsletter they run,Motley Fool Stock Advisor, has tripled the S&P 500!*
Tom and David just revealed their ten top stock picks for investors to buy right now.
Click here to get access to the full list!
*Stock Advisor returns as of 5/1/2017.
Offer from The Motley Fool: The 10 best stocks to buy nowMotley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the S&P 500!*
Tom and David just revealed their ten top stock picks for investors to buy right now.
Click here to get access to the full list!
*Stock Advisor returns as of 5/1/2017.
Leo Sun has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.