Smith & Wesson handguns.
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Smith & Wesson Brands stock was soaring Friday after the firearms and accessories company easily topped earnings forecasts Thursday evening.
Smith & Wesson (ticker: SWBI) reported a GAAP profit of $1.70 a share—or $1.71, excluding nonrecurring items—for its fiscal fourth quarter ended April 30, beating estimates for $1.08. Sales came in at $322.9 million, easily topping forecasts for $259.8 million.
Despite increasing costs, including wages, Smith & Wesson expanded its gross margins to 45.1% from 32.2% a year ago. In a conference call, Chief Financial Officer Deana McPherson credited that to a 3% price increase as well as a focus on higher-margin products.
The company saw a 67.3% rise in sales over the same quarter last year. Data from the National Instant Criminal Background Check System showed that the number of firearm background checks had increased by 23.2% in the corresponding quarter over a year ago.
McPherson added that the company had repaid its debt and increased its dividend by 60% to eight cents a share, and that the board had authorized a new $50 million share-repurchase program. CEO Mark Smith reasserted the company’s intention to remain debt-free and net cash-positive.
In a statement, Smith credited record growth of 42% in the U.S. firearms market but cited consumer preference for the brand as the reason for the above-market sales growth.
While Smith & Wesson didn’t offer forward guidance during the conference call, Smith acknowledged that the rising benchmarks as a result of the strong earnings will present a challenge in the future.
Investors didn’t seem to mind. Smith & Wesson stock was up 17%, at $23.30, in recent trading. The S&P 500 was down 0.9%.
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