NICS Data Positive for Cabelas and Dicks Sporting Goods (CAB, DKS, BGFV)

Piper Jaffray is out with a research report this morning, where it takes a look at the June NICS (National Instant Criminal Background Check System) data; the 3.9% year over year increase implies an improvement in firearm and ammo sales. The Piper analysts said, “For June, background checks across the US increased +3.9% y/y which was an increase from the +0.6% in April and -0.6% in May. We view these statistics as favorable for Cabelas Inc.

, Dicks Sporting Goods

and Big 5 Sporting Goods

who have felt comp pressure since November 2009 due to a significant falloff in y/y gun and ammo sales due to the surge in sales following the election of President Obama in November 2008.” They noted, “For June, background checks across the US increased +3.9% y/y which was an increase from the +0.6% in April and -0.6% in May. On a two-year basis, comp accelerated to +22% as the last big bump in firearm and ammo purchasing is lapped. We continue to believe that the NICS data points to a soft landing for CAB, DKS and BGFV as Y/Y increases in background checks should imply better comps in firearms and ammo for each company.” The analysts closed by saying, “In taking the straight average of the NICS data for the specific states where CAB has locations, y/y monthly background checks turned positive (+2.7%) for the first time in 2010. Recall that CAB has locations in 22 states and has multiple locations in ID, TX, NE, SD, MN and WI. Within the states with multiple locations, MN, NE and WI showed the strongest y/y growth in background checks.”