Market Overview

Loral Space and Sturm Ruger Fall After Special Dividend Payments

Loral Space and Sturm Ruger Fall After Special Dividend Payments

Both Loral Space & Communications (NASDAQ: LORL) and gun manufacturer Sturm, Ruger & Company (NYSE: RGR) traded ex-dividend on Wednesday -- investors who purchased the shares weren't entitled to receive the special dividends the companies' planned to pay. The stocks are down a corresponding amount.

Loral Space made a very large, one-time payout of $29.00 to its shareholders. The stock was last trading at around $53.72, a gain of roughly 0.11 percent on the day after adjusting for the dividend payment. The company operates in the satellite communications market and is a manufacturer of satellites and also provides satellite-based communications services.

Prior to Wednesday, Loral was trading at all-time high levels above $80.00. Historically, the stock has been a strong performer but in 2011, Loral posted a sequential decline in revenue.

The special dividend was made in connection with the receipt of proceeds from the company's sale of subsidiary Space Systems/Loral. The aggregate amount of the payout was $899.3 million. The record date for the $29.00 dividend was November 19, 2012.

Sturm, Ruger's payout was significantly smaller, but nevertheless accounted for around 7.6 percent of the stock's closing price on Tuesday. Shareholders of record received a special distribution of $4.50 per share. After accounting for the payment, RGR is down more than three percent on Wednesday in mid-day trading.

The stock has been an extremely strong performer in recent years as the company has benefited significantly from strong gun sales. Over the last 5 years, the shares have soared nearly 470 percent and in 2012 alone, the stock has climbed 57 percent.

The bullish trend in gun sales has been a very profitable investment which has been driven in large part by increasing fears over strengthened gun control laws in America. Prior to Wednesday's dividend payment, Sturm, Ruger was sitting near all-time highs and the stock has been a tremendous winner coming out of the financial crisis.

Revenues have climbed from $181.48 million in 2008 to $328.82 million in fiscal 2011. Although the company posted a small sequential decline in revenue in 2010, margins and net income have displayed a clear upward trend.

Through the first three quarters of 2012, Sturm, Ruger has been solidly profitable and the company has generated revenue of roughly $350 million during that time. Heading into the holiday shopping season, Sturm, Ruger is already having a record-setting year and analysts are modeling total sales of $466.65 million for fiscal 2012.


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