Bearish Barron's Article Sinks Smith & Wesson (SWHC), Sturm Ruger (RGR)
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Shares of Smith & Wesson (Nasdaq: SWHC) and Sturm Ruger (NYSE: RGR) are falling today amid a bearish article put in Barron's over the weekend. Smith & Wesson is currently down 3.5% to $5.82, while shares of Ruger are down 2.8% to $12.38.
The Barron's article highlights a concerning shift in a leading industry metric: the FBI's monthly count of background checks. Following last year's historic election, the FBI check soared 42% from the same month in 2007, but the most recent reading for May came in at up just 15% on a year-over-year basis.
The piece also points at each stocks sharp year-to-date run-up: Smith & Wesson shares have surged more than 150%, while Ruger shares have doubled since the beginning of 2009. Based on current levels, the two gun stocks trade around 20x Wall Street's estimates, more than double the historic multiples. Without a continuation of the pre-election gun transactions, Barron's argues that shares of both the companies could be cut in half.
The Barron's article highlights a concerning shift in a leading industry metric: the FBI's monthly count of background checks. Following last year's historic election, the FBI check soared 42% from the same month in 2007, but the most recent reading for May came in at up just 15% on a year-over-year basis.
The piece also points at each stocks sharp year-to-date run-up: Smith & Wesson shares have surged more than 150%, while Ruger shares have doubled since the beginning of 2009. Based on current levels, the two gun stocks trade around 20x Wall Street's estimates, more than double the historic multiples. Without a continuation of the pre-election gun transactions, Barron's argues that shares of both the companies could be cut in half.
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