Smith & Wesson Stumbles on Weak Guidance

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Smith & Wesson Holding Corp. (NASDAQ: SWHC) reported fiscal second-quarter financial results after markets closed on Thursday. The company said that it had $0.68 in earnings per share (EPS) and $233.5 million in revenue, versus consensus estimates from Thomson Reuters called for $0.56 in EPS and $227.61 million in revenue. The same period from last year had $0.25 in EPS and $143.24 million in revenue.

In terms of the guidance for the coming quarter, the company expects EPS in the range of $0.52 to $0.57 and revenues in the range of $230 million to $240 million. The consensus estimates are calling for $0.59 in EPS and $237.74 million in revenue for the fiscal third quarter.

At the beginning of 2017, this company’s holding corporation will become American Outdoor Brands Corporation, pending shareholder approval. Management believes this name better represents the broad range of product offerings and the plan to continue building upon a portfolio of strong American brands. American Outdoor Brands Corporation will serve as the holding corporation for Smith & Wesson, Battenfeld Technologies, and Crimson Trace, which represent the company’s firearms, manufacturing services, accessories, and electro-optics divisions.

On the books, cash and cash equivalents totaled $73.9 million at the end of the quarter, versus $191.28 million at the end of the previous fiscal year.

James Debney, President and CEO, commented:

We are very pleased with our second quarter results, which exceeded our financial guidance. In our Firearms Segment, we believe higher revenue was driven by strong consumer demand as reflected in adjusted background checks from the National Instant Criminal Background Check System (NICS) as well as our own market share gains.  In our Outdoor Products & Accessories Segment, we completed the acquisitions of Taylor Brands and Crimson Trace, both of which were accretive to our non-GAAP earnings.

Shares of Smith & Wesson closed Thursday up 2.8% at $23.98, with a consensus analyst price target of $28.44 and a 52-week trading range of $18.14 to $31.19. Following the release, the stock was down 5% at $22.75 in the after-hours session.