NEW YORK (TheStreet) -- Smith & Wesson (SWHC) shares are up 1.5% to $9.55 in trading on Wednesday after the gun manufacturer reported second quarter earnings results that were ahead of analysts expectations for the period.
The company reported second quarter net income of $5.1 million, or 9 cents per diluted share on an adjusted basis, which beat analysts' EPS expectations by 2 cents per share. Net sales of $108.4 million for the quarter also beat analysts' $105.8 million estimates for the period.
Smith & Wesson said that it expects to earn between 9 and 11 cents per diluted share for the current quarter, while analysts are expecting the company to earn 20 cents per share during the period.
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TheStreet Ratings team rates SMITH & WESSON HOLDING CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate SMITH & WESSON HOLDING CORP (SWHC) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Leisure Equipment & Products industry and the overall market, SMITH & WESSON HOLDING CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- 41.88% is the gross profit margin for SMITH & WESSON HOLDING CORP which we consider to be strong. Regardless of SWHC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.03% trails the industry average.
- SWHC, with its decline in revenue, underperformed when compared the industry average of 4.9%. Since the same quarter one year prior, revenues fell by 22.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- SMITH & WESSON HOLDING CORP's earnings per share declined by 35.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SMITH & WESSON HOLDING CORP increased its bottom line by earning $1.47 versus $1.22 in the prior year. For the next year, the market is expecting a contraction of 38.1% in earnings ($0.91 versus $1.47).
- You can view the full analysis from the report here: SWHC Ratings Report