Smith & Wesson (SWHC) Raises Outlook, Shares Soar

Shares of Smith & Wesson Holding Corp. (SWHC) were trading up +1.71 or +7.35 percent to $24.99 per share in Tuesday’s premarket after the company issued a better than expected guidance for the third quarter and fiscal 2016 year. Smith & Wesson Holding Corp. stock closed at $23.28 per share, up +1.30 or +5.91 percent in yesterday’s regular trading session.

Springfield, Massachusetts based Smith & Wesson Holding Corp. was founded in Norwich, Connecticut in1852 by Horace Smith and Daniel B.
Wesson. The company is a major designer and manufacturer of firearms and BB guns, as well as a manufacturer of ammunition. Smith & Wesson revolvers and pistols have become standard issue for many of the police forces and military throughout the world. The company’s subsidiaries include Thompson/Center Arms, O.L. Development Inc. and Bear Lake Holdings Inc. among others.

Yesterday, the company announced that it now expects fiscal third quarter revenue of $175 million to $180 million with earnings per share of $0.39 to $0.41. Full 2016 fiscal year guidance is now for $650 million to $660 million with earnings per share of $1.36 to $1.41. The analyst consensus was for $154.6 million or $0.28 per share for the third quarter and $636.5 million and $1.32 for the full year.

Referring to itself in the third person, Smith & Wesson stated that, “The Company indicated that the sell-through rate of its products at distribution has been stronger than originally anticipated, resulting in reduced distributor inventories of its firearms. The company added that Adjusted National Instant Criminal Background Check System (NICS) data for the month of December, which serves as an indicator of consumer purchases, reflected strong growth versus December 2014.”

The surge in Smith & Wesson along with rival Sturm Ruger (RGR) shares came after Obama announced on his weekly address on Friday that he planned to discuss gun control options with Attorney General Loretta Lynch. “A few months ago, I directed my team at the White House to look into any new actions I can take to help reduce gun violence, and on Monday, I’ll meet with our Attorney General, Loretta Lynch, to discuss our options.”

According to ABC News, the details of Obama’s possible executive orders will be announced later today. Obama is expected to detail the meaning of being “in the business” of selling guns in the country under U.S. law. The possible measure could require gun dealers to institute background checks on potential firearms purchasers.

Sales for firearms typically rise ahead of any possible gun control legislation. Obama’s intention of tightening U.S. gun control laws has sparked significant demand for guns from the public since reports of these plans surfaced last Thursday. The President is scheduled for a Town Hall meeting in which he will discuss gun control on Thursday.

Due to the premarket action, Smith & Wesson stock will open at a new all time high this morning. The stock was one of the best performers in yesterday’s market action, which saw most stocks sell off sharply.

Other News About SWHC

Smith & Wesson’s Jaw-Dropping Year

Sales this year have been much better than expected.

Smith & Wesson: Fundamentals Fuel Turnaround In 2015

Company’s turnaround began last April.

Other Stocks in the News

Eli Lilly shares fall 2% premarket as 2016 outlook lags estimates

Company’s guidance fails to meet analyst expectations.

Ford will expand self-driving test car fleet to 30

Company will triple the size of its self driving car fleet.

Published on Jan 5, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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