RGR, Sturm Ruger & Company Inc.

Will it survive?

• Can it pay its interest? -130.8×
  Does not cover its interest
  Operating income ($12M) ÷ interest expense $94K
  What this means

  A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.

• How heavy is the debt, net of cash? +$93M
  Net cash, debt-free
  Cash $18M + ST investments $74M − debt $0
  What this means

  Cash and short-term investments exceed every dollar of debt by $93M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? 69d
  Long (60+ days)
  DSO 43 + DIO 34 − DPO 8 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital —
  Not enough data
  Industry peers: median 10%
  What this means

  The filing data didn't include the inputs for this check.

• Owner-earnings margin 9%
  Solid through the cycle
  10-yr median margin, range 3%–22%; latest $38M = operating cash $54M − maintenance capex $16M
  Industry peers: median 8%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 7% of revenue this year, a 9% median across 10 years. Treating stock comp as the real expense it is (less $5M of SBC) leaves $33M.

• Are earnings backed by cash? $54M
  Loss, but cash-generative
  Net income ($4M) · cash from operations $54M
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

• Where do the earnings go? 94%
  Returns most of it
  Dividends + buybacks $36M ÷ Owner Earnings $38M — this fiscal year
  What this means

  Of $38M Owner Earnings, $36M (94%) went back to shareholders, $10M dividends, $26M buybacks. Net of $5M stock comp, the real buyback was about $21M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does. This year's proportion is 94%; across the record (2016–2025) it is 87%, the capital-allocation section below.

• Investing or harvesting? 0.69×
  Harvesting
  Capex $16M ÷ depreciation & amortization as filed $23M
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

The promise and the pay packet

• Is the buyback buying ownership, or mopping up? 0.9%
  The count is genuinely shrinking
  Stock compensation $5M (fiscal 2025), 0.9% of revenue · repurchases $26M · diluted shares -8.8% since 2022
  What this means

  Stock handed to employees is a real cost paid in the owner's own currency: it is charged against profit, but the shares it creates are permanent. Many companies repurchase stock at the same time, which looks like a return of capital and often is not — if the count barely moves, the cash merely cancelled the pay packet and bought the owner nothing. The three states worth telling apart are a count genuinely shrinking, a count standing still despite large repurchases, and a count rising because the issuance was never offset at all.

Graham’s defensive tests · 2 of 5 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Miss
  Revenue ≥ $2B · $546M
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Pass
  Current ratio ≥ 2× · 3.87×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Earnings stability Near
  A profit every year (10-yr record) · 1 loss year
  What this means

  Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.

• Dividend record Pass
  Uninterrupted dividends · paid every year (10)
  What this means

  An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.

• Earnings growth Miss
  Earnings +33% over the record · −61%
  What this means

  At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $1.55/share (latest year $-0.27), the averaged base the calculator's gate runs on, and book value is $17.76/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 9 of 10
  What this means

  Lost money in 1 year(s), look at what happened there before trusting the average.

• Operating margin 16% → 4% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 16% early to 4% lately, median 14% — competition or costs are biting in.

• Owner earnings growth −7%/yr
  What this means

  Owner earnings shrank about 7% a year over the record.

• Worst year 2025 · −2.3% op. margin
  What this means

  Operations went underwater in 2025, understand why before trusting the good years.

• Share count −1.8%/yr
  What this means

  The share count is shrinking, buybacks are quietly growing your slice of the business.

• Dividend record paid
  What this means

  Paid a dividend in 10 of the years on record.