Smith & Wesson (SWHC) Stock Declines on Weak Current Quarter Guidance

NEW YORK (TheStreet) -- Smith & Wesson (SWHC) shares are down 4.84% to $15.32 in early market trading on Friday following the release of the firearm manufacturer's fourth quarter earnings results after the closing bell yesterday.

The Springfield, MA-based company reported fourth quarter net income of $21.9 million or 45 cents per diluted share, 10 cents better than analysts' consensus 35 cent per share expectations.

The company also posted revenue of $181 million in the quarter versus analysts $175 million expectations.

However, the company issued current quarter earnings guidance between 21 cents and 23 cents per share on revenue between $140 million and $145 million.

Analysts are expecting the company to earn 28 cents per share on revenue of $147.3 million.

"Earlier in the fiscal year, we had stated that a company focus was to reduce inventories and we succeeded in reducing those inventories by $20.2 million during the fourth quarter," said CEO Jeffrey Buchanan. "As a result, robust cash flow from operations during the fourth quarter of $84.9 million allowed us to fully pay down the $100.0 million revolving credit line we had used to facilitate the purchase of BTI and still end the quarter with $42.2 million in cash."

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 reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel its 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:

SWHC Chart SWHC data by YCharts

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