Smith & Wesson Tops 1Q On Record Firearm Sales

Smith & Wesson Brands reported 1Q earnings of $0.97, better than analysts’ estimates of $0.48 per share. Its revenue came in at $278 million, higher than the Street estimates of $195.03 million. Despite posting upbeat 1Q results (ending on July 31) Smith & Wesson stock fell 3.5% on Friday due to the broader market sell-off.

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Smith & Wesson’s (SWBI) earnings surged over 310%, while revenues jumped 124.8% year-over-year. The company’s CEO Mark Smith said that “Our record revenue and unit sales during the quarter demonstrates our ability to rapidly respond to increased demand through our flexible manufacturing model and our state-of-the-art distribution facility, delivering outstanding products that resonate with the firearms consumer.”

On Aug. 24, the company completed the spinoff of its Outdoor Products & Accessories segment. As a result, the company’s board announced a quarterly cash dividend of $0.05 per share. The first quarterly dividend will be paid on Oct. 1 to shareholders of record as on Sept. 17. (See SWBI stock analysis on TipRanks).

On Sept 1, Lake Street analyst Mark Smith lowered the price target on Smith & Wesson Brands to $25 (37.6% upside potential) from $28. He maintained a Buy rating on the stock as he is positive about SWBI’s spinoff of its outdoor products business. He believes that the company’s shareholders will benefit from the spinoff, and says it will be easier to model and value the company as a pure-play in the firearms space.

Currently, the Street has an optimistic outlook on the stock. The Strong Buy analyst consensus is based on 3 Buys and 1 Hold. The average price target of $23.75 implies upside potential of 30.8% to current levels. Shares have already rallied over 154% year-to-date.