Smith & Wesson 460 (courtesy ottocarter.com)

If you combined the entire U.S. firearms industry into one company, its turnover wouldn’t match the money generated by any one of the top ten companies on the Fortune 500 list. If you want to invest your hard-earned money in a publicly traded gunmaker, Smith & Wesson and Sturm Ruger are just about it. So those of us looking to gauge the health of the American firearm biz look at their reports with keen interest. “Smith & Wesson ignited a selloff on Friday after reporting a slight drop in fourth-quarter earnings and a disappointing outlook for the new fiscal year,” foxbusiness.com reports. Yes, well . . .

the slight drop in earnings still represents a significant gain from years past, when the Springfield-based gunmaker was on the ropes (largely thanks to its bone-headed decision to buy a security company and its inability to shed same). And the “disappointing outlook” needs a little perspective.

National Instant Criminal Background Check System inquiries—adjusted by the National Shooting Sports Foundation to exclude checks related to permit applications—declined 16.6% in April to 988,726. But the total was still good enough for the second-highest April on record.

After Thursday’s closing bell, Smith & Wesson said it earned $25.1 million, or 44 cents a share, in the period ended April 30. The Springfield, Mass., company reported a profit of $25.2 million, or 38 cents a share, in the year-ago period.

Net sales fell 4.6% to $170.4 million. Gross margin widened to 40.9% from 38.3%. Excluding Walther firearm sales, sales were down 1.5%. Smith & Wesson phased out a distribution agreement with the German gun manufacturer in 2013.

The quarterly results beat Wall Street expectations. Analysts were looking for per-share earnings of 39 cents and revenue of $163.55 million.

Smith & Wesson, which posted 38% sales growth in same period last year, said lower rifle sales offset strong demand for handguns. The company has focused on grabbing a bigger share of the market for polymer pistols, launching new versions of its M&P handguns in recent years.

In May, rival gun maker Sturm Ruger (RGR) reported a 9% increase in total sales during the company’s fiscal first quarter.

Smith & Wesson chief executive James Debney said the company booked record sales, profits and margins in the just-completed year.

In other words, what do I got to do to make you guys happy? Help Hillary get elected? Just kidding. I hope.

[h/t TP]

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29 COMMENTS

  2. Hopefully as the panic subsides more companies will start expanding their product lines in better ways. I’m still waiting for Ruger to come out with new barrels for their Takedown 10/22.

    • How ’bout just beefing up the top of the receiver so I don’t have to be so afraid of torquing the mounting screws.

    • If she’s the nominee, I expect an increased demand for guns and ammo. Hear that, Dean Weingarten? Ammo prices may come down slightly prior to that, but any outspoken anti-gun Democratic nominee, Hillary especially, will drive up demand and prices. You won’t get your ammo price crash any time soon buddy, sorry. Oh, and don’t get me started on inflation either. It’s rampant, and that means there’s just no way in hell for prices to go back to their old lows.

      • If Hilary’s nominated, she WILL win. The GOP is going to put up another old, out of touch, super-wealthy white guy that the press will easily be able to destroy. They’ll just cry “SEXIST!” instead of “RACIST”.

        Well really, the GOP will put up a field of old, out of touch, super-wealthy white men and the media will choose the most liberal of them to be their poster boy–like they did in ’08 and ’12. Then when the GOP primary is settled, they’ll destroy him.

  4. Well, the economy in general had to catch up with the gun industry in particular at some point I guess…

  5. Wait until the next shooting or terrorist event. I guarantee Barry Soetero isn’t done…and I’m doing my buying duty( no S&W or Ruger yet). Stay tuned…

  6. Sounds like they are still making great profits , but some in big business just have to complain , sales of firearms are still going to be up for some time to come , as long as ammo is available . I myself am looking to purchase more firearms in the future , as I am sure are alot of folks . Be prepared and ready . Keep your powder dry .

  7. This kids is what we call a buying opportunity. And I have 10% of my portfolio parked in cash looking for same. I made 74% on ruger and 44% on sw in the one year period after newtown’s stock selloff. I sold same when the anniversary approached, fearful of a drop caused by congress and shannon. Wrong. Time to get back in

  8. When I saw the picture above, I was hoping you were announcing a raffle to, “Win this gun!”
    No chance of that I guess.

    • Thats not a bad idea. If TTAG had some CHEAP raffles for guns they could make some money by doing that.

  9. Over 988,000 NICS checks in April.
    Wow. They can’t all be ofwg’s with 50 or so guns already in the safe. That has to mean a LOT of new gun owners.
    I’m thinking of people who maybe went to a class, read the NRA literature that comes with new guns, or…
    Maybe they found out they couldn’t buy the gun they wanted. Now they are thinking of the Second Amendment as we near the mid-term elections…

  11. We can hope for more bone headed policy moves by the administration to upset the folks who vote.

    somehow i am not worried about a lack of bone headed moves
    sigh…

  12. Smith didn’t get into financial stress because of the security company, although that business certainly was a drain on its finances. What truly almost killed S&W is when its former owners, Tomkins PLC of London, signed a horrible deal with the Clinton administration in 2000.

    It was disaster. Smith was boycotted by the industry and the public. S&W lost 40% of its sales. The Feds sued the boycotters but couldn’t stop the tide. Smith was purchased by Saf-T-Hammer for $15 million and assumption of debt, when Tomkins had paid $112 million for it. It was a fire sale.

    Smith’s new owners then rejected the Clinton agreement and has been solid every since. But IMO Smith is not as well-managed as Ruger. And that’s coming from a self-described Smith weenie.

  13. C’mon man, cut me some slack. I just emptied the gun-slush-fund on a Sig P290RS. See you in about 4 months.

  14. I bought S&W in April of ’12 for $8.27. It lost $1.48 on Friday and is down to $15.52. I will take almost doubling my money in 2 years as a positive sign. Wish I had invested more!!

  15. And why would you buy the new Ruger 11/22 with no 22 ammo?? , supplies of most ammo is good , but no 22 LR, and ammo is still up in cost too… and we need some new stuff in the firearm lineup , like bigger ammo magazines and fixed sights as standard on hunting rifles, and I am still looking to find the S&W MP10 in 308 Win. no one can find any ?? wonder why???

  17. Just because NICS numbers are down, doesn’t necesarily mean firearms sales are down. Holders of concealed carry licenses are exempt from NICS checks, after all. We already know that the number of active licensees continues to grow, as that aggregate data is public record. So that would be a growing segment of the market whose purchases are becoming less and less visible through the normal statistics.

      • You’re absolutely correct. I should have been more clear and indicated that exemption from NICS checks for licensees is optional, per state. My post was imprecise and easily suggested this was universally applied. Some states, including Ilinois, do not avail themselves of that option. In fact, most states do not offer the exemption.

        States with Constitutional carry and no license system at all would necessarily not even be able to take advantage of this. However, some states with the exemption are larger states with high licensee rates and presumably higher gun purchase volumes. So it’s still a legitimate effect, but, as you correctly pointed out, has its limitations.

        On the plus side, West Virginia, as of this month, now offers this exemption. Here’s the latest list:

        https://www.atf.gov/content/firearms/firearms-industry/permanent-brady-permit-chart

        It’s sometimes easy to forget that many other places don’t offer as much firearm freedom as Texas does. As always, be certain to verify anything you read on the Internet, particularly as it pertains to the laws of one’s own state. Good feedback, Zog. Thanks.

        • I believe the CHL NICS exemption is an FBI decision, not a state one. The requirements are:
          1. The CHL has to require a NICS-equivalent background check.
          2. The license can’t be valid for more than five years.

        • Federal law sets the eligibility criteria, but it’s up to the states whether to pursue it. It basically comes down to a background check being required that is up to NICS standards. It isn’t exactly that the FBI approves the exemption, it’s more a matter of whether the state’s license/permit is up to NICS standards. Best case study is Alaska, whose system the FBI deemed lacking in 2005. So their permits were no longer eligible for the exemption. Alaska remedied that an now offers two flavors of permits, one NICS exempt and one not, for purchasing purposes. It gets complicated….NICS or what’s called “point of contact.”

          Nevertheless, just because a state’s license system is eligible, does not mean the state will actually grant that freedom. Hell, some states are out there mandating background checks for non-FFL sales. So there are differences in how states approach this, beyond what minimums the FBI demands.

  19. I purchased my first S&W shares at 4.83 back in Jan 2012. I kept accumulating all the way to 8.00 amassing around 6,000 shares. I have been slowly selling since it hit 11, making my last sale last week at 17.00 Still have 2,000 shares.

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