Shares of Smith & Wesson Brands jumped 5.2% on Friday after the firearms manufacturer reported that sales more than doubled in the second quarter, propelled by a period of social unrest and Covid-19 fears.
In the second quarter of fiscal year 2021, Smith & Wesson’s (SWBI) revenue surged 118.7% to $248.7 million year-on-year, topping analysts’ expectations of $223 million. Handgun sales spiked 98% to $161 million in the three months ended October 31 year-on-year, while long guns sales ballooned 217% to $76 million during the same comparative period.
The gun maker earned an adjusted 93 cents per share in the reported quarter compared to $0.01 per share during the same period last year. Analysts had been looking for 63 cents per share.
“I am pleased to report a second consecutive record-breaking quarter for our 168 year old company,” Smith & Wesson CEO Mark Smith stated. “Because of the hard work of our employees, who have been diligently following our safety protocols, we have been able to continue safely operating our business and, during these extremely difficult times when so many of our fellow Americans are out of work, we successfully created and filled 287 new jobs during our second quarter.”
Smith added that the record sales quarter came after federal background checks for all firearm types, which are considered the best available proxy for consumer firearm demand, increased 57.5% in fiscal 2Q over the comparable time frame last year.
In addition, the company’s board authorized a $0.05 per share dividend to shareholders of record as of December 17, 2020, with payment to be made on January 5, 2021.
Smith & Wesson shares have declined 12.5% over the past three months but are up a stellar 123% since the start of the year. From the Street, the stock still scores a Strong Buy analyst consensus backed by 3 Buys versus only 1 Hold. That’s with an average price target of $22.50, which implies upside potential of 41% to current levels
Following the results, Cowen & Co. analyst Cai Rumohr reiterated a Buy rating on the stock with a $24 price target (51% upside potential).
“SWBI’s big EPS beat and view of continued demand strength over the next two quarters should be seen positively by investors, especially after the stock’s recent retreat,” Rumohr wrote in a note to investors. (See SWBI stock analysis on TipRanks).
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