Smith & Wesson’s Profit Soars 228% but Shares Tumble (SWHC)
3/6/2013 3:30:36 PM
Gun maker, Smith & Wesson Holding Corporation’s (NASDAQ: SWHC) fiscal third-quarter profits leaped more than threefold as Americans rushed to buy firearms, after a tragedy in Connecticut last December sparked off heated debate among lawmakers over current weapon laws. The Company also raised its outlook on full-year results, late last evening.
Back in December, a mass shooting took place at an elementary school in Connecticut which killed 20 children. Subsequently, there was a nationwide elevated demand for firearms restrictions.
Fearing tougher gun control laws, many Americans started to stock firearms, boosting sales of many firearms makers, including Smith & Wesson.
Nonetheless, shares took a beating on Wednesday as investors fear that future sales could feel the pinch if lawmakers enact tighter laws restricting buying of guns and ammunitions. By midday trade on Wednesday, shares slumped nearly 5%.
For the fiscal third quarter, the Springfield, Massachusetts-based Company reported a profit of $14.6 million, or 22 cents a share, a staggering 228% jump in profit from $4.4 million, or 7 cents a share, in the year earlier quarter. Earnings from continuing operations came at 26 cents a share.
Sales during the period climbed 38.8% to $136.2 million.
Analysts polled by Thomson Reuters had forecasted sales of $133.7 million.
"Performance gains were driven by continued robust consumer demand for firearms," said Chief Executive James Debney said in a statement.
The Company also lifted its outlook on full-year earnings.
Smith & Wesson now expects full-year earnings from continuing operations to be in the range of $1.17 a share to $1.19 a share on sales of $575 million to $580 million.