AP News

Ahead of the Bell: Smith & Wesson's big quarter


NEW YORK (AP) — Smith & Wesson's stock jumped 10 in premarket trading Wednesday after the gun maker's quarterly performance topped expectations and its outlook surprised Wall Street.

Last week, an earnings report from rival Sturm, Ruger & Co. rattled investors in the firearms sector after it fell well short of projections and said that orders for guns this year had become "more realistic," compared with 2013.

Gun sales surged last year in the wake of the massacre at Sandy Hook Elementary School in Newtown, Conn., and other notorious shootings, like the one at a movie theater in Aurora, Colo. Many gun enthusiasts went on a buying spree, fearing new laws restricting gun ownership.

While laws that would seriously curb gun sales never materialized, it did not halt the rush to stock up.

Smith & Wesson's profit for the full fiscal year was five-fold the previous year.

KeyBanc Capital Markets analyst Scott Hamann said that he is still cautious on the firearms industry and anticipates Smith & Wesson will face moderating demand. Shares of Smith & Wesson and Sturm, Ruger are down about 13 percent this year.

Hamann stuck buy his "underweight" rating on the company's stock.

Ronald Bookbinder of Benchmark was more upbeat, saying said that even though demand has slowed, he believes Smith & Wesson's volume should continue to rise as it increases manufacturing capacity and takes market share.

Bookbinder maintained his "buy" rating.

Late Tuesday, Smith & Wesson reported third-quarter earnings of 36 cents per share on revenue of $145.9 million for the period ended Jan. 31. Earnings from continuing operations were 35 cents per share.

Analysts polled by FactSet predicted earnings of 29 cents per share on revenue of $142.5 million.

President and CEO James Debney said that during the quarter Smith & Wesson continued its focus on building market share for its M&P polymer pistols and launched several new products in January.

For the fourth quarter, the Springfield, Mass., company foresees earnings from continuing operations between 37 and 40 cents per share, which is better than the 35 cents analysts were projecting.

Revenue is expected in a range of $159 million to $164 million. Wall Street is calling for revenue of $164.8 million.

Shares of Smith & Wesson Holding Corp. climbed $1.19 to $12.99 before the market opened.


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