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Smith & Wesson Trades Lower After Q3 Report

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Despite a large increase in net income for the third-quarter on the back of sharply higher gun sales, shares of Smith & Wesson (NASDAQ: SWHC) are lower on Wednesday.

Investors are showing caution amid political rhetoric calling for stricter gun control regulation in the United States, and are discounting the strong Q3 results. Heading into the final hour of trade, SWHC was down almost 6 percent to $9.64.

The company's third-quarter results were ahead of Wall Street consensus estimates and Smith & Wesson also boosted its full-year guidance. The company reported net income of $14.6 million or $0.22 per share, compared to $4.4 million or $0.07 per share, in last year's corresponding quarter.

Income from continuing operations was $17.5 million or $0.26 per share, compared to $5.4 million or $0.08 per share, in the year ago period. This compared to Wall Street consensus EPS estimates of $0.23.

Net sales in the third-quarter were up 39 percent to $136.24 million from $98.13 million last year. This also beat analysts' consensus revenue estimates of $133.68 million.

Looking ahead to Q4, Smith & Wesson forecast net sales of $165 million to $170 million and earnings from continuing operations of $0.38 to $0.40 per share. This compares to current analysts' consensus of sales of $155.06 million on EPS of $0.30.

For the full-year, the company also raised its guidance. Smith & Wesson now sees net sales of $575 million to $580 million on EPS of $1.17 to $1.19. This compares to the company's previous guidance of $550 million to $560 million in sales and EPS of $1.00 to $1.05. Currently, Wall Street analysts have consensus EPS estimates of $1.06 on sales of $561.34 million for the fiscal year.

The decline in shares of Smith & Wesson has not effected competitor Sturm, Ruger (NYSE: RGR). Although the stock opened Wednesday's trading session lower, RGR was last trading near the flatline on the day.

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