Smith & Wesson misfires on Wall Street

A better-than-expected earnings report isn't enough to offset a disappointing forecast and signs that the gun-buying boom is waning.

By Bruce Kennedy Sep 9, 2013 9:02AM

An attendee walks through the Smith and Wesson booth during the 2013 NRA Annual Meeting and Exhibits on May 3, 2013 in Houston, Texas (© Justin Sullivan/Getty Images)Smith & Wesson (SWHC) might have expected investors to be pleased with its strong earnings report last week, which showed the famed U.S. gunmaker beating analysts' expectations for its first quarter of fiscal 2014.


But its weaker-than-expected forecast and news that the nation's recent gun-buying frenzy appears to be over took their toll on the company's share price Friday, knocking it down more than 10% to $10.31.


On Thursday, Smith & Wesson reported its first-quarter net sales were $171 million, up nearly 26% compared with fiscal first-quarter 2013. Income was $26.5 million, or 40 cents per share, compared to $18.9 million, or 28 cents a share, a year ago.


"Ongoing increases in our manufacturing capacity, combined with strong consumer demand for firearms, resulted in increased market share and higher sales,” president and CEO James Debney said in the press statement.


But where Smith & Wesson misfired, at least in Wall Street's eyes, was in its outlook. It estimates net sales for fiscal second-quarter 2014 at between $135 million and $140 million, with earnings per share at somewhere between 20 cents and 22 cents. While the full-year forecast jibed with expectations, Barron's reports analysts were looking for the company to predict 29 cents per share with $143 million in sales for coming quarter.


It also appears recent concerns over stricter federal and state gun regulations, which sparked record arms sales over the past several months, have waned, and that the gun-buying public has lost its motivation.


"Widespread consumer fears of such tightened gun control drove a sharp surge in industry demand earlier this year," Wedbush Security analyst Rommel Dionisio wrote in a report Barron's cited. "However, we fear such a surge will prove to be short-lived, as such sharp sales increases are likely driven by consumers pulling forward their purchases from future quarters."


Adding to Smith & Wesson's woes were new FBI statistics for the National Instant Criminal Background Check System, which showed gun-purchase background checks at 1.28 million in July. Those numbers were virtually unchanged from June's figures and down from the 1.3 million background checks reported in July 2012.


Smith & Wesson is also planning to cut production by several days during the second quarter, as it moves to a new resource planning system, according to Reuters.


"Management is doing all it can to increase capacity, as fast as it can, through outsourcing," Benchmark Research analyst Ronald Bookbinder told the wire service, "while maintaining its high level of quality."


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190Comments
Sep 9, 2013 12:58PM
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Two types of people like to restrict gun ownership. Cowardly liberals and dirt bag criminals.
Sep 9, 2013 10:28AM
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There is still a bullet shortage.  I wouldn't call the boom just over yet since all these guns need something to fill them.
Sep 9, 2013 2:39PM
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Guns have been keeping us free from dictators for over 225 years,..it ain't broke - don't fix it.


Sep 9, 2013 1:45PM
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Nice to see some choices on the shelves lately! 

 

If only S+W could get their production moved to a more friendly state!  I feel for them being in the middle of all the gun haters and making the very products that protect those same idiots!

Sep 9, 2013 1:56PM
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Smith and Wesson...thumbs up. Don't outsource though. You don't want some mediocre company with it's hands on your good name.

Sep 9, 2013 11:23AM
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As long as Democrats control the White House Gun sales should do fine. Once A Republican wins I would sell
Sep 9, 2013 2:11PM
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I guess I will do my part and buy another gun.  after all it is one of the few american manufacturing industries left.  well at least SW is
Sep 9, 2013 2:05PM
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hey libtards, go hide in the closet when someone breaks into your house. I am protecting myself and family, and don't need no instructions from a libtard on how to defend myself
Sep 9, 2013 2:57PM
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An armed society is a polite society. Manners are good when one may have to back up his acts with his life.



Robert Heinlein


A tenet to live by..........or die by depending on your behavior.

Sep 9, 2013 2:01PM
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PALINSAFREAK-"republicans are frightened little people", "The NRA is a bunch of terrorists"

ex-Republican1907-"It`s Repubs that always want to cut education.

It`s the mushroom theory:keep everybody in the dark and feed us BS and vote Republican"

GENESISREADER-"Guns kill people!"

 

YOU KNOW I NEVER GET INVOLVED WITH THESE COMMENTS BUT I WOULD HAVE TO SAY THAT YOU THREE ARE THE BIGGEST FU..ING DOUCHE BAGS I HAVE EVER COME ACROSS. TAKE YOUR LIBERAL, WHINNY, SHARE THE WEALTH IDEAS AND SHOVE THEM UP YOUR A..'S! TAKE A BREAK FROM POSTING STUPID COMMENTS AND GO BACK TO WATCHING YOUR PRESIDENT GIVING SYRIA TIME TO PREPARE FOR A STRIKE FROM US.

 

IDIOTS!!!!!!!!!!

 

 

Sep 9, 2013 1:36PM
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Maybe the sales will pick up again, after this syrian thing comes full circle.  We may really be needing weapons considering how this thing cud play out.  Luv Smith n Wesson as they r a very old company , holding their own through the yrs!

 

Sep 9, 2013 2:04PM
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One point Three Million B/R checks per month, for months-on-end hardly indicates slow sales.

This is the same kind of fuzzy math that tells all us rubes that employment is getting better,

 when a moron can see it is anything-but.

Please note that the reporter didn't tell us he went to any Gun Stores to see the reality for his own-self.

Get out of the office Bruce, and go look around a little-bit. Come back and tell us all how 'slow' it is,

 out there in the real world.

Sep 9, 2013 2:48PM
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I OWN 8 GUNS AND NO LIBERAL IDIOT IS GOING TO TAKE THEM AWAY.
Sep 9, 2013 2:47PM
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THE LIBERALS JUST DO NOT GET IT, GUNS WILL NEVER GO AWAY JUST LIKE SEX
Sep 9, 2013 2:23PM
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SOMEONE-  I'M WITH YOU, JUST ORDERED A FNX 45 TACTICAL AT LUNCH. COMES WITH 3 15 ROUND MAGAZINES, RAISED NIGHT SIGHTS AND A FACTORY THREADED BARREL. I ALREADY HAVE THE GEMTECH SUPPRESSOR FOR IT. WILL BE HERE IN 2 DAYS!

 

 

Sep 9, 2013 1:37PM
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This demonstrates one of the contemporary idiocies of the Great God MARKUTT. A group of crackhead psychotics who know nothing about the firearms industry, manufacturing, or marketing have decided that a solid, old line company has a "bad outlook." There's some sort of free speech/press thing that applies to these pseudo-gurus of stock analysis that makes their dim-witted statements and pronouncements and predictions (that are always wrong) viable in the marketplace of ideas, but it gravels me that investors, speculators, and hedgers pay any attention to such baloney. Why anybody with more than a $1,000 follows such drivel is beyond "analysis." Fools.

Sep 9, 2013 2:08PM
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I wud love to own a nice Smith n Wesson.  I have shot them before along with many other brands, and have always wanted to own one.  i wud buy one, but am afraid to have my name listed as an owner.  The government at this time scares me.
Sep 9, 2013 2:48PM
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Now maybe they can start making some magazines, I have 2 M&P pistols 9 and 22 and have magazines on back order from 1\8\13!!!!! Had I known I would not be able to get extra mags I would have probably gotten something else THANKS S&W!!!!!!!!!!!
Sep 9, 2013 9:58AM
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In a bull market, record sales and it goes up a dollar and a half.  Weakness would be eight (bucks).  Good place to park money with little return, no dividend. 
Sep 9, 2013 2:45PM
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LIBERALS WANT TO CHANGE THIS NATION TO A SISSY NATION, NOTHING BUT, GAYS AND ATHEIST
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