Net Product Sales for fiscal 2006 are expected to increase by 10 percent to 12 percent over fiscal 2005, excluding potential additional revenue from new business ventures we may pursue. This increase is expected to come from improved sales penetration of the current sporting goods channel; new sales in law enforcement, federal government and international trade channels; new product introductions, including the M&P pistol series; and initial shipments of our award-winning Model 460 XVR revolver.
Gross profit as a percentage of product sales and licensing revenue is expected to increase from 29.1% (before the impact of the insurance recovery) in fiscal 2005 to approximately 32% in fiscal 2006. This increase will be driven by improved efficiencies in manufacturing operations, offset by increased depreciation expense related to new capital expenditures. Gross margin improvement is expected to occur over the course of the year, with the bulk occurring in the second half.
As a percentage of sales and licensing, operating expenses in 2006 are expected to increase slightly compared to fiscal 2005 levels, as we expand our sales and marketing resources and activities. We expect our interest expense to be approximately $1.3 million, substantially lower than fiscal 2005 levels, reflecting our refinancing activities in January 2005.
Net income for fiscal 2006 is expected to increase to between $6.3 million and $6.9 million, or between $.17 and $.18 per diluted share. This includes an anticipated compensation expense relative to SFAS 123 � of $1.7 million, or $.04 per share.
Net income of between $.17 and $.18 in fiscal 2006 would more than double the net income achieved in fiscal 2005, excluding the insurance recovery.
Capital expenditures are expected to be $12.0 million in fiscal 2006. Most of the capital expenditures relate to new products, capacity expansion and process improvements. Capital expenditures are expected to be internally financed.
Golden concluded, "We have now completed our first quarter of the new 2006 fiscal year. While details on our results for that quarter are not yet available, our revenue results are on track, giving us increased confidence in our double-digit revenue growth guidance for the 2006 fiscal year." //
Assume 50% earnings growth for 2007 to $0.27/sh and a P/E on that of 30. (I can't see how the mkt would grant a PE higher than 30 for SWB.) That gives you a mkt value of $8.10/sh. So I would say if SWB reaches $8.25 in the next 6 to 9 months, I would be prepared to sell it.