July NICS Checks Increase 15.9% - KeyBanc (RGR) (SWHC) (CAB)

July adjusted NICS checks increased 15.9%, noted analyst Scott W. Hamann of KeyBanc, citing FBI data

"July adjusted NICS checks increased 15.9% year-over-year to 946,528, driven by handguns (513,206, or +25.5%), long guns (325,206, or +4.6%), other (22,637, or +22.7%), multiple (16,726, or +11.0%) and admin (241, or -18.9%). The July increase compares to a 10.1% increase in June, a 4.7% increase in May and a 0.1% decline in April. Also, the two-year stack improved to +11.4% vs. +2.5% in June, -5.3% in May and -16.7% in April. Lastly, the unadjusted NICS number (including permits) increased 14.0% vs. +10.5% in June," said Hamann.

The analyst continued, "Overall, while we believe the July headline number came in above broader expectations as volumes again accelerated (following a 10.1% increase in June), seasonality came in above historical levels (+6.7% sequentially vs. +1.4% historically) and the stack again improved (+11.4% vs. +2.5% in June), we view these trends as all largely offset by three important dynamics: 1) commentary from both CAB and RGR on their 2Q15 calls refuting the accuracy of recent NICS data points as it correlates to underlying retail demand of new gun sales, supported by takeaways from our recent channel conversations; 2) we maintain that recent retail volumes also contain a function of industry discounting that is further driving unit demand, magnified by seasonally low volume levels (historically 6% of annual retail); and 3) the presence of additional headline/political catalysts in July surrounding the recent theater shooting in Louisiana, which seemingly drove significant unit volume outperformance in the southeastern part of the country (Figure 1; six states in the region all +25-30% during the month) that, we believe, will ultimately pan out as transitory and more pull forward in nature following the Baltimore riots in May and Charleston shooting in June."

KeyBanc continued to think retail unit velocity has peaked near term and maintained its Underweight rating on Sturm Ruger (NYSE: RGR) and Smith & Wesson (NASDAQ: SWHC), and its Sector Weight rating on Cabela's (NYSE: CAB)

For an analyst ratings summary and ratings history on Sturm Ruger click here. For more ratings news on Sturm Ruger click here.

Shares of Sturm Ruger closed at $57.29 yesterday.

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