FBI Has Over 2 Million Gun Background Checks in April

The FBI cleared 2,145,865 firearm checks in April, which puts it on a track to hit 20 million or more this year. No wonder major gunmaker Smith & Wesson Holding Corp. (NASDAQ: SWHC) posted a 61% increase in the sales for the most recently reported quarter to $211 million. Net income rose from $8 million in the same period a year ago to $31 million. The trend may not continue.

For some inexplicable reason, after firearm checks reached 9,831,123 in 1999, they did not rise above 9 million again until 2006. After a slowing of growth between 2009 and 2010, the year-over-year increase has been rapid.

The success of the gun industry is built on the growth rate that at the current pace will reach 30 million weapon background checks by 2018. At some point, demand has to peak, as it does with all products. However, forecasting gun sales is as hard as car sales, and maybe harder. There is an industry devoted to predicting auto sales. Not so much with guns.

There are several theories about why gun sales continue to rise. One is the news coverage of multiple gun deaths. A related one is that people feel safer with guns in their homes or offices. Another is that so-called open carry laws have grown quickly from state to state. According to the Law Center for Gun Violence, 31 states have open carry laws. Most of these refer to pistols and not long guns. If more states add legislation to allow open carry, gun sales should increase.
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Whether people should be able to carry guns openly, or concealed, or in their homes is one matter. The booming gun business, which could carry on for years, is another. It is good to be Smith & Wesson, or any company in the same business.