Is there no one else who tries to be neutral on this board? I'm a long so I'm biased.
Has anyone else notice the PPS has gone nowhere in a year? Last December before Sandy Hook this was trading for 10.80+. That 10.80+ was with less earning meaning it did have a higher P/E. Despite having record sales, record demand and $140 million buyback management has only been able to get this back to even. (Don't worry I opened my position in the high 7s and low 8s) (and I did say $140 million, before the $115 I believe they had a $25 million buyback in place early this year)
Fundamentally, there was nothing wrong with the business. I'd even say operations have improved over that time. Cashflows are great, borrowing terms likewise. Granted the market hates gun manufacturers, what has been done to return value?or expand the business? Fundamentally, the business is doing great but that doesn't equate to gains for the shareholder. I would be livid if I purchased this before the dip.
Then again management could be mocking me and my stupid investment. With $125+ million of cash on hand you would expect management to return that to shareholders. The only reason they wouldn't would be if they thought they could obtain a rate of return on the money greater than the shareholder could. Being in a savings account for Christmas, it could be drawing 1%.... 1% is greater than the stock has performed for most of the year
I think you're right. CAB same store sales +3.9%, +5.3% ex-firearms. "... Starting in August, we saw a significant deceleration in the sales of firearms and ammunition as well as a challenging consumer environment across all business channels."
Ammunition sales were still above prior year levels.
Just gotta say also that by focusing on a 1 year chart of SWHC you're effectively cherry picking a bad entry point to validate your angst with the stock. Your main gripe should be with how WILDLY volatile the chart has been. Entry points on candlesticks 37 days earlier and 40 days later will give a performance that beats the market by around 1.8x and 2x, respectively. And the market has been no slouch.
Also, without taking the time to be really analytical about it, if you look at that 1 year chart, there are more entry points that would beat the market than that lose vs market so a chimp that scaled in at various random times would have a good chance of trouncing the market.
Been selling when it moved up and then buying back in when it retreats and have done well over the past 12 months. Take profits when you can and then sell, and repeat. This stock has been doing this for some time.
All valid points and yes I would be livid if I bought in at the 10's. 8's & 9's for me. The buy back should have generated value for share holders. It didn't because as Captain stated the projection for Q2 really hurt the stock. Safety alerts happen and the stock should have already recovered. SAP, well seems pretty stupid it took that long and I would be suing someone's #$%$ over that. Q2 projection gave the shorts and press ammo to dog the gun business as declining. Even though projections for 2014 are to the beat. They cherry picked the Q2 CC.
My opinion is the stock is just being held back in the short term by emboldened shorts and weak handed longs due to the safety alert on the M&P, the extended production shut down which took away production days, and the one time cost of the SAP system integration. Any investors that went all in before the dip are hurting, no doubt. That goes against my philosophy of scaling in over time.
You are absolutely correct. There was this little window where it hit 13 and that was it. This stock does not trade well and has fallen out of favor. There are plenty of better places to invest, this is dead money.