Smith & Wesson Rises After Announcing Share Buyback
Gun-maker Smith & Wesson (NASDAQ: SWHC) announced on Thursday morning that its board of directors has approved an additional $15 million share buyback program.
In the wake of the news, the stock has jumped better than three percent during Thursday's trading session and was last trading at $8.22. The timing of the share buyback comes as Smith & Wesson's stock has fallen in the wake of the company's fiscal second-quarter earnings and then the tragedy in Newtown, Connecticut.
The stock began falling after the release of the company's quarterly results on December 6, despite the fact that the numbers were generally strong and Smith & Wesson raised its outlook. The pullback started on what likely amounted to profit taking as the stock is up sharply in 2012, but accelerated after the school shooting in Newtown.
The company finds itself in a difficult place as pressure mounts on politicians to enact stricter gun control laws.
On the one hand, the gun control debate has triggered an explosion in firearm sales in the near-term, but longer-term it could be a very real headwind for the company. It also puts Smith & Wesson in a difficult position from a public relations standpoint.
So, while business could not be better for the company right now, the unfolding controversy over gun control brings a large degree of uncertainty to the stock over the long run.
Despite recent losses, SWHC is still up better than 83 percent in 2012 alone. In the wake of Smith & Wesson's buyback announcement, competitor Sturm, Ruger (NYSE: RGR) was higher in the early going but those gains have since evaporated. At last check on Thursday, that stock was down 0.58 percent to $42.63.
At the end of last month, RGR had touched the $60 level before selling off sharply along with Smith & Wesson.
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