Gun sales slowing……

Wall Street Journal

Guns N’ Grosses: Arms Makers Fall Back From Obama Surge

By BILL ALPERT

Gun fanciers have loaded up on 15-round pistols and military-style rifles since the November election of a Democratic Congress and a president partial to gun control.

The fear of a renewed federal ban on assault weapons has boosted the revenues and shares of gun makers Smith & Wesson Holding and Sturm, Ruger.

Southport, Conn.-based Ruger saw earnings quadruple in its fiscal first quarter from a year ago, rising to about $6 million, or 30 cents a share, on revenue of $64 million. Smith & Wesson’s earnings doubled in its fiscal fourth quarter, to $7.4 million, or 14 cents a share. The Springfield, Mass., company’s revenue was up 20% to $100 million.

On this rush of business, investors bid up shares of Ruger to as high as $13.71, from $6.50 before the election, while Smith & Wesson stock has risen to more than $7.50, from a pre-election $1.60.

But now the gun industry’s leading indicator — the Federal Bureau of Investigation’s monthly count of the instant background checks it runs for gun dealers — is settling back toward pre-election levels. While November background checks were 42% above the year-earlier level, May’s were up just 15%.

Dealers confirm the slowdown. “It was really big around the first of the year,” says a Georgia dealer (who, like all we found, wanted to remain unnamed). “Now, it’s starting to taper back off. It’s not near like it was. Everyone is starting to relax.”

If the recent sales burst turns out to be just a one-time pop, it won’t be the first time…or even the second. Firearm sales spurted in 1993, before the federal assault-weapons ban.

Yet within a few years, gun sales returned to the pre-ban trendline. Another rush for guns after 9/11 lasted only about three months. And the rest of the time, guns have provided only flat sales and narrow margins for Ruger or Smith & Wesson.

Smith & Wesson advised shareholders last week that its backlog and revenues might ease off, sequentially, in the current July fiscal quarter. By Friday, the company’s shares had themselves eased to around $5. Ruger shares, meanwhile, were about $12.