Investment Thesis
Sturm Ruger maintains financial stability with a fortress balance sheet and positive free cash flow, but faces severe operational deterioration including negative operating income, near-zero net profitability, and collapsing earnings power despite modest revenue growth. The company's minimal revenue growth combined with margin compression and 115% EPS decline suggests structural challenges in a mature market with declining profitability trajectory.
Strengths
- Fortress balance sheet: $283.3M equity, $23.7M cash, zero debt provides financial downside protection
- Strong liquidity position: 3.50x current ratio and 2.99x quick ratio ensure operational stability
- Positive free cash flow of $14.0M despite operational challenges demonstrates underlying cash generation capacity
Risks
- Operating at a loss with -1.4% operating margin and -$1.9M operating income despite positive gross profit indicating operational inefficiency
- Earnings deterioration: net margin of 0.1%, ROE/ROA of 0.0%, and EPS collapsed 115.3% YoY signals eroding shareholder value
- Stagnant revenue growth at +1.9% YoY in a mature market with no demonstrated pricing power or volume expansion
Key Metrics to Watch
- Operating margin trajectory and timeline to restore profitability
- Gross margin sustainability and SG&A expense management relative to revenue
- Free cash flow trend and capital allocation decisions
- Revenue growth acceleration or further deceleration
- Earnings per share recovery and net margin expansion
Financial Metrics
Revenue
141.4M
Net Income
128.0K
EPS (Diluted)
$0.01
Free Cash Flow
14.0M
Total Assets
349.1M
Cash
23.7M
Profitability Ratios
Gross Margin
19.9%
Operating Margin
-1.4%
Net Margin
0.1%
ROE
0.0%
ROA
0.0%
FCF Margin
9.9%
Balance Sheet & Liquidity
Current Ratio
3.50x
Quick Ratio
2.99x
Debt/Equity
0.00x
Debt/Assets
0.0%
Interest Coverage
-114.65x
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-07T07:13:05.993169 |
Data as of: 2026-03-28 |
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