Companies and Brands

Are Smith & Wesson Earnings Really Not Enough for Investors?

Chris Lange

Published: June 19, 2020 10:11 am

When Smith & Wesson Brands Inc. (NASDAQ: SWBI) reported its fiscal fourth-quarter financial results after the markets closed on Thursday, the gun company said that it had $0.57 in earnings per share (EPS) and $233.6 million in revenue. That compared with consensus estimates that called for $0.33 in EPS and revenue of $198.7 million. The same period of last year reportedly had EPS of $0.26 on $175.7 million in revenue.

During the most recent quarter, net sales increased 32.9% year over year. Note that a change required by the Tax and Trade Bureau related to the timing of federal excise tax assessment within the company’s Firearms segment favorably affected net sales in the quarter by $16.7 million.

Strong consumer demand for firearms, as reflected by adjusted National Instant Criminal Background Check System results, combined with a consumer preference helped Smith & Wesson deliver growth and market share gains in its firearms business in fiscal 2020.

The company noted that it achieved a number of key objectives in the Outdoor Products & Accessories segment and made significant progress on its preparations to spin-off the business as a standalone, publicly traded company in August.

Management believes its strong brand portfolio and new e-commerce platform were instrumental in allowing the Outdoor Products & Accessories segment to deliver fourth-quarter revenue growth of 2.4%, as consumers responded to retail store closures by seeking out our popular brands and products online.

Over the course of the 2020 fiscal year, the company launched over 300 new products and extensions, some of which represent the entry into completely new product categories, such as meat processing.

Smith & Wesson stock traded down 2% Friday morning, at $18.28 in a 52-week range of $5.41 to $19.75.

Shares of rival gun company Sturm, Ruger & Co. Inc. (NYSE: RGR) were down about 0.5% to $72.72, with a 52-week range of $38.44 to $73.89. The consensus price target is $80.00.