About the Gun Industry Doing Badly Post-Election...

Shares of three major firearm and ammunition entities surged after some first-quarter results indicate renewed demand.

About the Gun Industry Doing Badly Post-Election
Shares of three major firearm and ammunition entities surged after some first-quarter results indicate renewed demand. photo from foxbusiness.comweb photo

Rumors of the gun industry's demise have been greatly exaggerated, it would appear, as reuters.com reports shares of gunmakers' stock surged on Tuesday after Sturm, Ruger & Co. posted quarterly results that suggest "demand is recovered following a steep sales drop after the election of Donald Trump as president."

The perceived downturn was the result of a brief waning of demand after a buying frenzy that lasted most of 2016 and only grew more intense as the tight presidential race drew to a close.

"The demise of the firearms industry was likely greatly exaggerated," said Ruger CEO Christopher Killoy at company's annual meeting. "We've seen ups and downs before."

Ruger's shares jumped as much as 16 percent, the story says, and were still up by 10 percent during afternoon trading.

Shares of Smith & Wesson’s parent company, American Outdoor Brands Corp. were up 4.4 percent.

"Sturm Ruger's report late on Monday provided fresh ammunition for investors arguing the industry is already on the mend. Its stock has recovered about 30 percent since a post-election sell-off hit bottom in mid-March, and Sturm Ruger remains down just 2 percent from before the election."

"The prevailing sentiment at the moment appears to be that industry sell-through patterns and retailer inventory destocking trends should largely normalize by fall 2017," wrote Wunderlich analyst Rommel Dionisio in a note following Sturm Ruger's report. He raised his price target for Sturm Ruger to $62 from $51.

The story says that recent NICS background check numbers hint at a stabilization of the market, as many predicted. After a sharp post-election drop, background check numbers in April were flat compared with April 2016, according to the National Shooting Sports Foundation.