Smith & Wesson Hits New 52-Week High on More Buybacks - Analyst Blog
On Jun 26, 2015, shares of Smith & Wesson Holding Corporation SWHC reached a new 52-week high of $17.04, finally closing at $16.80. The closing price reflects a gain of almost 77.4% so far this year.
Smith & Wesson recently announced that its board of directors has approved a buyback of up to $50 million worth of shares that will remain active through Jun 23, 2017. The company’s buyback announcement assures shareholders that all is well with the company.
Smith & Wesson is a leading firearm manufacturer and designer, delivering a broad portfolio of quality firearms, related products and training to the global military, law enforcement and consumer markets. Moreover, the company’s online retail segment sells firearms accessories, branded products, apparel and related shooting supplies.
The Dec 2014 takeover of Battenfeld Technologies Inc. had a positive impact on Smith & Wesson’s financials. Battenfeld is a leading provider of hunting and shooting accessories and Smith & Wesson is expected to gain considerable traction from this takeover, particularly in the firearm accessories market and the hunting vertical as well. Revenues increased 6.2% year over year despite a 2.4% fall in Firearm revenues in the fourth quarter fiscal 2015, thanks to contributions from the company’s new Accessories division.
Battenfeld boasts a solid distribution network and is renowned for producing high-quality products. Smith & Wesson will likely witness a boost in its sales as it leverages Battenfeld’s potential.
Although Smith & Wesson reported tepid sales in the last few quarters, it has surpassed our earnings estimates for the last 15 quarters. Management has also shared the benefits with its shareholders through systematic buybacks. Its operating cash flow was $114.8 million in fiscal 2015, up 27.3% from $90.2 million in the prior fiscal.
Smith & Wesson carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth buying now include Black Diamond, Inc. BDE, Callaway Golf Co. ELY and Sturm, Ruger & Company Inc. RGR. While Black Diamond and Callaway sport a Zacks Rank #1 (Strong Buy), Sturm, Ruger & Company carries a Zacks Rank #2 (Buy).
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