Shares of Smith & Wesson parent American Outdoor Brands surged more than 40 percent on Friday in the wake of unexpectedly robust earnings and an optimistic financial outlook.
The Springfield, Mass., company said net income came to $7.6 million in the fiscal first quarter, after a loss of $2.2 million in the same period a year ago. Excluding one-time items, adjusted earnings per-share climbed to 21 cents from 2 cents. Wall Street analysts had expected an adjusted profit of 12 cents a share.
Net sales rose 7.6 percent to $138.8 million, beating the consensus estimate of $134.5 million.
The firearms segment said revenue rose 5.9 percent.
American Outdoor Brands also issued guidance for second-quarter earnings of 11 cents to 15 cents a share. That’s better than the 8 cents a share that analysts anticipated.
Chief executive James Debney pointed to the company’s new products, including the M & P Shield 380 EZ pistol, as a driving force behind the most recent quarter’s upbeat results, the Financial Times reported. “That pistol has been extremely well received by our consumers and continues to gain momentum,” Debney said in a statement.
Firearm sales dropped last year after gun enthusiasts expected that Donald Trump’s election victory could delay stricter gun control measures and therefore lessen the desire to stockpile weapons.
“Industry inventory appears cleaned up,” IFS Securities analyst Ron Bookbinder told the New York Post. Bookbinder has a “strong buy” rating on American Outdoor shares, citing “an improved environment for the firearms industry and a possible inflection point for firearm manufacturers.”
Shares of American Outdoor (AOBC) rose $4.26, or 44 percent, to close Friday at $14.03.
Before late Thursday’s earnings announcement, American Outdoor Brands shares had lost nearly 20 percent year-to-date.
Gun control activists have called for a boycott of investment managers Vanguard and BlackRock, which are the largest owners of several publicly traded firearms manufacturers due to their exchange-traded funds, CNBC explained. In April, BlackRock introduced new exchange-traded funds that excluded stocks of gun manufacturers and retailers, including American Outdoor Brands.
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