Shares of firearms manufacturer, Smith & Wesson Holding Corporation (NASDAQ: SWHC), edged up in premarket trading on Friday after the company, following closing bell ring on Thursday, reported that it swung back into profit during fiscal second quarter as margins continued to strengthen while demand for guns and rifles was also robust.
The company not only topped Street’s estimate on fiscal second quarter but also raised its outlook for full-year.
For the full-year, Smith & Wesson is now expecting earnings of $1.0 to $1.05 a share on sales of $555 million to $560 million, up from its earlier projections of earnings of 85 cents to 95 cents a share on sales of $530 million to $540 million.
For the fiscal third quarter, the company projected earnings of 19 cents to 21 cents a share on sales of $126 million to $ 131 million. Analysts Polled by Thomson Reuters, on average, were expecting earnings of 16 cents a share on sales of $125 million.
Meanwhile, in order to enhance the shareholder value, the company also announced its plans of share buyback. The Company’s board approved share repurchase of up to $20 million.
During the second quarter both Smith & Wesson and its rival Sturm Ruger & Co, saw their shares and sales jump as buyers stocked up guns and rifles fearing that in case Mr. Obama is reelected as the President then tighter guns-control regulations could make buying firearms an ominous task. Besides, intensified publicity from the National Rifle Association bolstered the demand for firearms.
The company said that it was expecting a strong demand for guns and sporting rifles in the current quarter.
Better operations management also helped the company to boost its earnings. While an increase in internal production capacity helped reduce production cost, much improved supply chain management allowed the company to counter-balance the impact of annual two week shutdown.
At the end of second quarter, firearms backlog was estimated at $332.7 million, a twofold increase from the year earlier quarter but 15 percent reduction from the last quarter.
For the quarter ended October 31, the Company reported profit of $21.2 million, or 31 cents a share, against a loss of $1.6 million, or two cents a share, in the year earlier quarter.
Earnings from continued operations, (after excluding company’s discontinued security business), rose to 24 cents from a cent. Net sales soared 48% to $136.6 million, thanks to robust demand for its entire product line.
Recent Comments