BobHAJ said:
Being a Financial Analyst by trade I thought to myself - that's worth looking into.
Ruger financially is a fairly strong company - much smaller than I imagined but in good financial shape. Based on cash flow, balance sheet, EPS for this year and a relatively high P/E I consider that Ruger is a bit over priced at the recent $10.85/share. If they were paying .80 a share dividend on their annual EPS that gives about 7.5% annual return on investment - which is a really, really good dividend rate.
Problem is I don't think that this year they're gonna be able to pay that 80 cents a share at least not out of earnings. They're on track to make between .30/share to .50/share annual EPS. Currently for Q1-Q3 they're at .35/share. There's a real possibility that 4Q03 they might lose 2 or 3 cents a share (thus the .30 cent estimate). Personnaly I think Q4 will be in the .10 to .15 range. If they match their best 4Q ever (.40 in 1999) they will still only make 75 cents/share for 2003 and no company I know of is going to dip into retained earnings so they can pay out a historical 80 cents per share annual dividend (stranger things have been known to happen though).
In addition to get a dividend in 2003 you had to be a stockholder of record in 2001 (another weirdness). If you buy the stock today you will not collect any of that high dividend rate until 2005 if the date of record follows their historical pattern.
You have to really hold Ruger stock to get that 7.5% return (which for long term investors or those investing for income isn't a bad thing).
Another factor is that Ruger stock trades in a pretty narrow range ($10 to $14) on a 12 to 14 month cycle so it's really not even a candidate for swing traders. Might be ok for those who hold for 1 to 2 years.
Ruger stock looks to be a good deal for those investing for income and who plan to hold it for years and years. Those looking for capital appreciation (me) should look elsewhere.
Being a Financial Analyst by trade I thought to myself - that's worth looking into.
Ruger financially is a fairly strong company - much smaller than I imagined but in good financial shape. Based on cash flow, balance sheet, EPS for this year and a relatively high P/E I consider that Ruger is a bit over priced at the recent $10.85/share. If they were paying .80 a share dividend on their annual EPS that gives about 7.5% annual return on investment - which is a really, really good dividend rate.
Problem is I don't think that this year they're gonna be able to pay that 80 cents a share at least not out of earnings. They're on track to make between .30/share to .50/share annual EPS. Currently for Q1-Q3 they're at .35/share. There's a real possibility that 4Q03 they might lose 2 or 3 cents a share (thus the .30 cent estimate). Personnaly I think Q4 will be in the .10 to .15 range. If they match their best 4Q ever (.40 in 1999) they will still only make 75 cents/share for 2003 and no company I know of is going to dip into retained earnings so they can pay out a historical 80 cents per share annual dividend (stranger things have been known to happen though).
In addition to get a dividend in 2003 you had to be a stockholder of record in 2001 (another weirdness). If you buy the stock today you will not collect any of that high dividend rate until 2005 if the date of record follows their historical pattern.
You have to really hold Ruger stock to get that 7.5% return (which for long term investors or those investing for income isn't a bad thing).
Another factor is that Ruger stock trades in a pretty narrow range ($10 to $14) on a 12 to 14 month cycle so it's really not even a candidate for swing traders. Might be ok for those who hold for 1 to 2 years.
Ruger stock looks to be a good deal for those investing for income and who plan to hold it for years and years. Those looking for capital appreciation (me) should look elsewhere.
