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Sturm Ruger (NYSE:RGR), which booked a large increase in sales during the holiday quarter, said the presidential election will drive gun demand in 2016.
During a conference call with analysts, Ruger CEO Michael Fifer said the gun maker is telling independent distributors to prepare for an increase in consumer demand before and after the November election.
“We’ve actually encouraged our wholesalers that this summer, anticipating a little bit of a normal seasonal slowdown in the summer, regardless of the politics, that this is the big opportunity to take advantage of the upcoming election,” Fifer said in response to an analyst’s question about inventory. “It really is a big opportunity for them. The day after the election, it’s too late” for wholesalers to add inventory, he added.
Earlier in the call, Fifer said, “I think we’ll see a step up in demand if a Democrat wins the election, particularly so if they win the Senate.”
Fifer also suggested that the pending Supreme Court nomination following the death of Justice Antonin Scalia could also “drive concerns about gun rights.”
Washington politics are known to be a catalyst for gun sales. When lawmakers pushed for new gun control measures in 2013, the FBI reported a record number of background checks completed during the year.
Ruger said Thursday its fourth-quarter revenue climbed 24% to $152.4 million, and the company swung to a profit of $17.1 million. Per-share earnings of 88 cents easily beat Wall Street’s estimate of 75 cents, while revenue matched projections.
After the strong quarter, Ruger will raise its dividend to 35 cents a share for shareholders of record on March 11, up from 25 cents in the previous quarter.
Ruger’s stock hit a new 52-week high of $68.90. Shares of fellow gun maker Smith & Wesson (NASDAQ:SWHC) also rallied.
Fifer noted that after the industry saw declining demand in 2014, consumer interest rebounded in 2015. In addition to rising sales, a decline in inventory at the company and its distributors signal that demand has improved, Fifer added.
Background checks for gun purchases increased 9% compared to 2014, according to the National Shooting Sports Foundation. The year ended with a bang. According to the NSSF’s figures, approximately 2.23 million checks were completed in December, a 37.6% increase over December 2014.
The NSSF adjusts data from the FBI to strip out background checks performed for non-purchasing activity such as permit applications.
The FBI’s National Instant Criminal Background Check System processed an all-time record of 23.1 million checks in 2015, about two million more than the previous high set in 2013. Demand appears to have carried over into 2016. In January, the FBI recorded 2.54 million background checks, a new record for the month.
Smith & Wesson also reported positive results for its most recent quarter. In December, the company said its net sales were up 32% at $143.2 million for the three-month period ended Oct. 31, 2015, and earnings more than doubled. Smith & Wesson subsequently raised its outlook last month.