The last few presidential elections have had an impact on the stock prices for top gun manufacturers. Gun stocks surged after the 2008 and 2012 election, as marketers raised concerns that the Democratic administration would move for more stringent controls. On the other hand, gun stocks plunged in the months following the 2016 election of Donald Trump.
A new election is fast approaching. Trump is the odds-on favourite to hold the presidency, but many polls also suggest that it will be a competitive match-up regardless of who takes the Democratic nomination. So, how should investors respond?
Sturm Ruger (NYSE:RGR) is one of the leading gun manufacturers in the United States. Its stock has dropped 6.7% year-over-year as of close on February 7. Investors can expect to see its fourth quarter and full-year results for 2019 on February 19.
In the year-to-date period, Sturm Ruger reported total set sales of $305 million compared to $374 million in the prior year. Gross profit fell to $74 million – down $26 million from Q3 2018. The stock possesses a not-so-favourable price-to-earnings ratio of 25 and a price-to-book value of 3.2.
American Outdoor Brands (NASDAQ:AOBC) stock has dropped 19% from the prior year. In the second quarter of fiscal 2020 the company reported net sales of $154.4 million which were down from $161.7 million in the prior year. Both companies have suffered softer sales since the election of Trump.
Things could get worse on the market for gun manufacturers if we wins a second term in November.
