Shares of gun makers, retailers rise on background check data

Gun stocks were rising broadly Tuesday on news that firearms background check data for last month rose nearly 5 percent. The latest figures represented the second-highest May on record.

A hand gun in the Smith & Wesson booth at 144th National Rifle Association (NRA) Annual Meetings and Exhibits in Nashville, Tennessee, last April.

Daniel Acker | Bloomberg | Getty Images

Firearms makers Smith & Wesson and Sturm Ruger were both up about 2 percent midday. Also, , which gets about 20 percent of its revenue from firearms and ammunition sales, was up about 1.5 percent midday, while Sportsman's Warehouse, another gun retailer, was up nearly 3 percent. (Tweet This)

Analysts use the firearms background data as a leading indicator for sales performance in the firearms/ammunition business.

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The National Instant Criminal Background Check System (NICS) data, showed there were 918,707 adjusted firearms background checks in May 2015, representing a 4.7 percent increase over the same period a year ago. The latest month represented the second-highest May on record for the 17-year-old system. By comparison, NICS adjusted data showed a 0.1 percent decrease in April compared with a year earlier and a 3 percent decrease in March.

D.A. Davidson analyst Andrew Burns said in a note Tuesday that the latest "industry data and commentary continues to support the view that the hunting equipment market is improving with each passing quarter."

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Meanwhile, Dougherty & Co. analyst Andrea James said in a note Tuesday that the May figures were "not a blowout but slightly above our expectation." Additionally, she said, "Firearms trends continue to normalize after the 2013 surge" and that "long-term demographics trends support increased firearms ownership for sport shooting and home protection."

The adjusted firearms data is supplied by the National Shooting Sports Foundation (NSSF) and based on the Federal Bureau of Investigation's published NICS information. The NSSF-adjusted data remove concealed carry weapon permit background checks.