Smith & Wesson stock soars after favorable earnings report

Investors flocked to Smith & Wesson last week after the gun maker’s parent company, American Outdoor Brands, reported an increase in earnings, spiking stock prices by nearly half.

Shares for AOBC traded at $14.03 by the end of day Friday, a 43.6 increase in the 24 hours following the company’s report of 7 percent revenue growth during its first quarter ending July 31.

The upswing follows conservative guidance issued from the company over the summer as the results of its “challenging” fiscal year — which ended April 30 — became public. Now, instead of a forecast of tepid gun sales for the remainder of the year, top executives sound more optimistic — even revising its full-year sales projections upwards to $630 million.

“We are pleased with our operational and financial results for the first quarter,” said Chief Executive Officer James Debney in a news release Thursday. “Our increased profitability was driven by consumer preference for our new products, reduced promotions versus the prior year, and solid progress on a number of our expense reduction initiatives.”

Revenue for the company’s gun sales increased 5.9 percent. Debney told investors Thursday long gun sales spiked nearly 38 percent. The outdoors segment — which includes brands such as Bubba Blade, Old Timer and Crimson Trace, among others — grew nearly 15 percent, according to filings.

Analysts praised AOBC for diversifying into the outdoor market and for stabilizing its gun sales after nearly two years of unpredictability following the election. Some, however, described the price swing as an “overreaction” and “too rich.”

Still, the growing confidence in the firearms market influenced share prices for Vista Outdoor and Sturm, Ruger and Company, increasing more than 5 percent and 7 percent, respectively, as of Friday.

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