Strong gun sales propel Smith & Wesson
The company sees shares soar more than 20% after reporting strong earnings and raising its full-year outlook.
The stock was up more than 21% Friday after the gun maker beat analyst expectations and raised its revenue outlook for the year.
Smith & Wesson reported a profit of $4.4 million, or 7 cents per share, for the three months ended Jan. 31. Analysts were expecting only 4 cents a share. The company is back in the black after reporting a loss of $52.8 million, or 88 cents per share, a year ago. That year-ago loss was due in part to the plunging value of the perimeter-security systems business the company is now trying to sell.
Revenue for the quarter was also a surprise, coming in at $98.1 million as firearm sales soared. Wall Street was expecting revenue of around $95 million.
So is this what happens when the economy comes back? People rush out to buy guns? The company is expanding manufacturing to meet increased demand and has begun making a new handgun for the personal-protection market. The company has also been cutting costs and saw operating expenses drop to 20% of net sales from nearly 27% a year earlier.
Smith & Wesson's firearms backlog more than doubled to $198.5 million from a year earlier. "Such a substantial increase in order backlog is a positive leading indicator for near-term sales momentum, as the company should fulfill much of this order flow within the next two to three quarters," wrote Wedbush analyst Rommel Dionisio, according to Reuters.
Smith & Wesson raised its full-year revenue outlook to between $395 million and $400 million from a previous estimate of $385 million to $395 million. Analysts were expecting $393 million.
Smith & Wesson shares rose more than 20% to $6.83 Friday. Shares had dropped to the $2.50 range last fall but began recovering in December. The company competes with Sturm, Ruger & Co (RGR), which did not see any related uptick in shares Friday. Sturm Ruger shares were down less than 1% to $43.10.
Sturm Ruger shares have more than doubled in the last year.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Why are stronger numbers considered bad news? Investors are worried about the impact on inflation and interest rates.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.