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Smith & Wesson Among Gun Makers Whose Sales Soared Last Week

As the nation mourns the Orlando terrorist attack by a man who was radicalized and pledged his allegiance to ISIS, Smith & Wesson is enjoying a spike in sales. In fact, the gun-maker’s surged to just a few dollars; of its new 52-week high of $30.44.

Gun-maker Smith & Wesson (NASDAQ: SWHC) rose more than 7% during intraday trading on Friday. Two factors contributed to the stock’s soar.

One is the gun-maker beat analysts’ estimates for its fourth quarter. Revenue in the fourth quarter reached $211 million, representing 22% growth. Earnings per share can in at $.66. Analysts were expecting just $.54. Gross margin for the quarter was 41.6% compared with 37.1% for the comparable quarter last year.

However, guidance was $.51 to $.53. On the news, Smith & Wesson stock soared.
The second reason the stock is up is due to it being upgrade to buy from hold. Craig Hallum has a price target of between $26 and $28. Wedbush reiterated its neutral rating on the stock earlier this month. Its price target is between $26 and $23.

James Debney, Smith & Wesson President and Chief Executive Officer, commented, “Our solid fourth quarter and full year performance further validates our vision, which is to become the leading provider of quality products for the shooting, hunting and rugged outdoor enthusiast.”

Debney boasted that the company continued to execute on its long-term strategy, while delivering financial and operational results that set a number of new company records. Its firearms division, enjoyed several important new product introductions and continued to leverage its flexible manufacturing model, allowing the company to benefit from strong consumer demand.

The company expects fiscal 2017 to have a strong balance sheet, combined with its track record of successful acquisitions. That positions the company well for an expanding role in the market for products for shooting, hunting, and rugged outdoor enthusiasts, according to Debney.

Debney’s positivity about fiscal 2017 reflects increased sales due to the renewed calls for gun control. Sales have spiked following previous massacres. The shooting in Orlando claimed 49 lives.

One reason the stock may be surging is because analysts believe the outlook provided by management is conservative, given it hasn’t accounted for a potential spike in demand that would come after the Orlando shooting.

However,Yahoo Finance quoted the company’s CFO Jeff Buchanan as saying, “basically, this guidance does not take into account any surge, any potential spike in consumer demand as a result of any

Gross margin performance remained strong throughout fiscal 2016, driven by robust volumes in our firearms division and favorably impacted by the strong gross margins in our accessories division.

In fiscal 2016, Buchanan said the company we generated $168.6 million in operating cash flow, establishing a new company record. We ended the year with cash and cash equivalents totaling $191.3 million and total bank debt and Senior Notes of $175.3 million, leaving us with zero net debt. In fiscal 2017, we expect to use the strength of our balance sheet, including our unused $175 million revolving line of credit, to fuel growth opportunities, both organic and inorganic.”of that. He added that with regard to what happened in Orlando, any impact on demand is unknown and therefore not included in its guidance.

Shares of sellers were up many of the companies last week. Zacks reported that Sturm Ruger & Co. (NYSE: RGR) climbed to 8.5% after Orlando shooting. Vista Outdoor Inc. (NYSE: VSTO), which makes ammunition was up roughly .19%. rose about 0.19%.

Sporting goods retailer Sportsman’s Warehouse Holdings, Inc. (NASDAQ: SPWH) saw its shares fall 2.55%. Cabela’s Inc. (NYSE: CAB)l shares fell 1.59%.

1 response to “Smith & Wesson Among Gun Makers Whose Sales Soared Last Week”

  1. Right after gun tragedies, gun and ammo makers stocks always see a temporary lift. This last until the both political parties move on to the next topic that they’ll never fix. When the last major U.S. shooting happened, there was no ammo to be found anywhere in my area. People make a run on gun shops in the fear that laws will change. It’s morbid but an investor can almost guarantee easy profits by buying up these shares as a tragedy is happening, then sell them off in a few weeks.

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