$SWHC Sees Little Sales Impact From New Gun Laws

Smith & Wesson, $SWHC, is firing on all cylinders.

The gun manufacturer posted quarterly earnings and revenues that beat Wall Street expectations on Tuesday. It reported $0.35 EPS on $145.9 Million in sales. Consensus estimates called for $0.29 EPS on $142.7 Million in revenues, according to the Analyst Ratings Network.

$SWHC profit rises 43%
as handgun sales continued to grow and margins strengthened. Gross margin rose to 40.2% from 36.6%.

— E McFadden (@koffeedragon) Mar. 5 at 08:53 AM

Guidance also impressed. The company expects to report between $159 Million and $164 Million in revenues this quarter. It anticipates earnings of between $0.37 and $0.40 per share. That topped consensus estimates of $0.36, according Yahoo Finance.

The company raised its full year guidance to $1.39 and $1.42 EPS on between $615 Million and $620 Million in sales.

The stock rose more than 16% at the open.

$SWHC selling to the American public, Homeland Sec, and the police isn't a bad add to the portfolio

— Wiley C (@MadeofGold) Mar. 5 at 09:17 AM

The quarterly results and guidance allayed investor concerns that harsher gun laws, adopted in the wake of the Sandy Hook elementary school shootings that killed 20 children and 6 adults, were severely damaging sales.

Whoever said people were losing interest in guns forgot to tell Smith & Wesson. $SWHC surging on strong gun sales. http://stks.co/j0M2E

— catherine tymkiw (@ctymkiw) Mar. 5 at 08:33 AM

The company announced in January that it would stop selling handguns in California rather than comply with a new “smart gun” law that demands firearms be equipped with technology to etch bullets when discharged. The marks would enable fired bullets to be traced back to specific firearms. Opponents of the so-called “micro stamping” law have claimed that the mechanism that marks the bullets can be easily tampered with and could lead to people not registering their firearm, among other things.

Maryland also has a smart gun law. New Jersey law dictates that all new weapons sold in the state must be smart guns within three years after the first smart guns are sold. A judge upheld Connecticut’s assault rifle ban earlier this year. New York also adopted an assault weapon ban and new registration requirements last year.

On the conference call, Smith & Wesson executives said the laws in NJ, NY and Connecticut would not impact sales greatly because these states have always had restrictive gun laws. “So basically, right now, the California micro stamping is only thing that is really out there,” said James Debney, Smith & Wesson CEO on the earnings conference call, according to a Seeking Alpha transcript.


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