Smith & Wesson Holding Corporation (NASDAQ:SWHC) reported a very good 1st quarter earnings report, and its stock jumped by 22%, according to Bloomberg. Prior to the market opening this morning, Smith & Wesson Holding Corporation (NASDAQ:SWHC) saw a dramatic rise in price for their shares, and it was mostly due to a high demand for guns.
Analysts have indicated that the demand for weapons has been boosted by the fear that Barack Obama, if re-elected in November, will impose more stringent gun laws upon the American people. These fears have fueled rising gun sales all across the U.S.
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Smith & Wesson Holding Corporation (NASDAQ:SWHC) reported a $0.28 per share earning, and revenues totaling $136 million for the quarter, which ended on July 31st. FactSet surveyed a group of analysts, and the findings showed that expected earnings were $0.18 per share on a revenue of $128.7 million. Sturm, Ruger & Company (NYSE:RGR), another gun-maker is up 40% for the year. Since 2008, Sturm, Ruger & Company (NYSE:RGR) is up approximately 630%.
Smith & Wesson expects their yearly earnings to total $0.85-$0.90 per share, with a revenue of $530-$540 million. This would be an increase of 33% from the previous year, and will undoubtedly skyrocket past analysts’ estimates of $0.57 per share on a revenue of $498 million.
Wedbush analyst, Rommel Dionisio, says that the high gun sales have pushed the company higher, and that August saw a 28% increase in sales. KeyBanc Capital markets has a “hold” rating on the stock, and says higher volumes and cost cuts have contributed to the increase in earnings. Since the first of the year, Smith & Wesson has more than doubled in share price, and the $2 increase in pre market trading today is only a part of that rise.
Benchmark Capital notes; Strong Q1 top-line and EPS beat; raised FY13 guidance and long-term goals. After the close, Smith & Wesson reported a strong Q1FY13 (July-end) beat, with sales and EPS from continuing operations of $136 million (+48% y/y) and $0.28 vs. consensus estimates of $129 million and $0.18. Firearm backlog at the end of the quarter was $392 million, up more than 130% y/y. More importantly, due to a quicker than expected increase in capacity, management increased its FY13 guidance from $485-$505 million in sales and $0.60-$0.65 in EPS to $530-$540 million in sales and $0.80-$0.85 in EPS. This guidance now represents 29-31% topline growth, with an 18% operating margin. Furthermore, the company has raised its long-term margin goals from a three-year target operating margin of 18% to a new target of 20-22%.
Growth driven by modern sporting rifles and handguns. Handguns (56% of sales) grew almost 39% in the quarter, despite a 27% y/y growth comp in Q1FY12. Excluding SWHC’s professional sales (the majority of which are pistols), we estimate commercial handguns were up more than 50% y/y. Modern sporting rifles (23% of sales) were even stronger, up 100% y/y; we note that almost the entirety of the sequential growth during the quarter was from modern sporting rifles. Management also noted that, excluding Walther, unit firearm sales into the consumer channel were up 30.1% vs. an adjusted NICS checks increase of 23.5% in the same period, signaling continued market share gains.
So, an interesting point to take away from all of this is the fact, that although the Democrats have argued that we need to be limited in buying arms, they have successfully shot themselves in the foot this time. President Obama’s liberal cabinet and activist friends have not made him popular among conservatives, and a push for gun control certainly won’t help ease that. However, I am sure that Smith & Wesson is grateful to him, and will be issuing Barack Obama a Salesman of The Year award.