Smith & Wesson stock soars on earnings, upgrade
Shares of Smith & Wesson Brands (SWBI) soared on better-than-expected third-quarter results. CEO Mark Smith said in the release that the company expects "the firearm market to experience healthy demand through the 2024 election cycle."
The stock was also upgraded to Buy from Hold at Craig-Hallum, which argues the company is entering the election cycle in "optimal position."
Yahoo Finance's Josh Lipton and Julie Hyman discuss the stock's surge in the video above.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Stephanie Mikulich
Video Transcript
JOSH LIPTON: As we get closer to the closing bell on Wall Street, we're going to start here with Smith & Wesson. You could see that stock is skyrocketing in today's trade. Couple pieces of news here. Company reports and very much pleases adjusted EPS for Q3, that beats, comes in at $0.19. Street was at $0.11 so an easy beat on the bottom.
Net sales, they're up about 7% to 137.5 million. Gross margins also better than the Street was looking for. And on top of that, we get an upgrade from the team at Craig-Hallum. They go to a buy on the name. They take their target to 18.
They talk about this beat. They also, Julie, talk about the upcoming election. They say that should give the company momentum.
JULIE HYMAN: Yeah, we tend to see firearm sales go higher ahead of elections, ahead of Democrats being elected in office because of fear about new gun legislation although that mostly has not come to fruition. But those are the cycles we tend to watch. I thought it was interesting, I was looking through the conference call, handguns are not where the sales activity was from. So handgun sales were actually down. Average selling price of handguns were down.
It was long guns that were higher in both amount of sales and average selling prices. And I don't know-- I mean long guns is a big category. I don't know if we're talking about demand from hunting, from sports, from whatever. But whatever it was, they saw an increase.
JOSH LIPTON: Yeah, they didn't break it down. It is the election. Just to put some more numbers on that, they note that during the 2020 election, which allowed the company, they said, to generate more than a billion in revenue, $4.15 EPS and almost $300 million free cash flow. And that was kind of their point to their clients that even if this election doesn't drive the same magnitude of demand, their bet is that equity investors, they think, in a pretty good spot with Smith & Wesson there.
