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Smith & Wesson Guidance Misses The Target, Shares Tank

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Here's Why Smith & Wesson Benefits From 'Normalized' Demand

The stocks of gun makers are seeing prices tank after hours Tuesday as Smith & Wesson (NASDAQ: SWHC) reported inline earnings but gave guidance which was very concerning.

Smith & Wesson revenues registered $131.90 million in sales which missed estimates of $133.93M. Second quarter revenue dropped 18 percent YoY. 

Increasing inventories and declining sales led to the guidance cut and the firearm maker will need to make up a lot of ground in Q3 2014 to generate a revival of investor appeal. Apparently the company's FCPA violation wasn't enough to boost sales.

The company reported an EPS beat of $0.26 versus estimates of $0.25. Second quarter EPS dropped 35 percent YoY.  Smith & Wesson also cut its guidance materially. Original FY2015 EPS range was $1.30 to $1.40 and today the company issued lower guidance of $0.89 to $0.94.

In Tuesday's release the company addressed a 22.9 percent drop in the second quarter net sales saying: "...lower demand follows the sudden, rapid surge in demand we experienced during the previous fiscal year as consumers purchased firearm products in anticipation of possible additional restrictive regulations". Smith & Wesson shares lost over 10 percent as of 5:30PM EDT while Sturm, Ruger & Co (NYSE: RGR) saw its shares fall roughly 5 percent. The lower demand impacted long guns the most (including modern sporting rifles) with a sales reduction of 67.2 percent compared with Q2 2013. 

Smith & Wesson also cut its guidance materially. Original FY2015 EPS range was $1.30 to $1.40 and today the company issued lower guidance of $0.89 to $0.94. 

Posted-In: Earnings News Guidance Hot After-Hours Center

 

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