Why American Outdoor Brands Corporation Gained 11% in September
What happened
American Outdoor Brands (NASDAQ: AOBC) stock beat the market last month by gaining 11%, compared with a 0.4% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.
The rally pushed shares back into positive territory for the year, and the firearms retailer is currently up 14%, compared with a 7% gain in the S&P 500.
So what
Investors pushed shares higher in response to a surprisingly strong earnings report by the Smith & Wesson owner. Sales improved 8% in the fiscal first quarter, the company said in late August, and those gains came despite a reduced reliance on price cuts. As a result, gross profit margin jumped to 38% of sales from 32% in the year-ago period.
Now what
American Outdoor Brands' latest product releases are finding traction with firearm enthusiasts, and that success bodes well for growth, given the rising demand trend across the industry.
The retailer's sales and profits are subject to big swings that are driven by political and regulatory news, though. Investors should take that elevated volatility into account when considering whether to buy into the firearm giant's recent rally.
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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
