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Categorized | Equities

Strong sales power Smith & Wesson


Posted on August 28, 2015

Shares of Smith & Wesson advanced on Friday after it lifted its full-year forecast and reported better than expected first-quarter results.

The gun manufacturer expects full-year fiscal 2016 earnings in the range of $1.14 to $1.19 a share, compared with its previous projection of $1.02-$1.07 and topping estimates for $1.06 a share.

    Smith & Wesson lifted its sales forecast to $610m-$620m, against estimates for $612.6m.

    Profits for the three months to the end of July were $14.4m, or 26 cents a share, compared with $14.6m, also on 26 cents a share, in the same period a year ago. Sales rose 12 per cent to $147.8m.

    Analysts had forecast earnings of 15 cents on sales of $143m. Adjusting for one-off items, earnings of 32 cents a share beat expectations.

    “The combined results of our firearms and accessories divisions indicate to us that consumer demand and the preference for our products was stronger than anticipated,” said James Debney, chief executive.

    Shares of Smith & Wesson, which have advanced more than 86 per cent this year, jumped 11.2 per cent to $18.03 by the close.

    GameStop, a video game retailer, fell more than 8 per cent to $42.49 after analysts at Benchmark downgraded the stock from “hold” to “sell” with a price target of $29.76.

    “We believe the company’s core business model, the physical distribution of hardware, software and used product through a traditional retail network, will be increasingly displaced from growing consumer adoption of digital, streaming and subscription content service channels and the competitive pressure from mobile platforms, an ecosystem we anticipate will extend to the living room,” said Mike Hickey, analyst.

    The downgrade arrived after second-quarter profits came in at $25.3m, or 24 cents a share, on sales of $1.76bn — in line with analysts’ expectations. Same-store sales rose 8.1 per cent, ahead of forecasts for a 1.7 per cent gain.

    Amgen nudged up to close at $155.89 after the US Food and Drug Administration approved Repatha, its cholesterol drug.

    Shares of United Continental enjoyed a tailwind from the S&P 500, after S&P Dow Jones Indices said the airline group would replace Hospira on the benchmark index after the market close on September 2.

    Hospira, a maker of injectable drugs, is being acquired by Pfizer in a transaction that is expected to be completed on or about that date.

    United Continental, whose shares climbed more than 7 per cent to $57.12, will join American Airlines, Delta and Southwest in the S&P 500.

    After two days of gains US stocks were mixed on Friday following a lacklustre trading session in Europe. The S&P 500 energy index was the best-performing sector, rising 2 per cent on the back of a rally in oil prices.

    The S&P 500 ended the day almost flat at 1,988.87, the Dow Jones Industrial Average nudged down to 16,643.01, and the Nasdaq Composite was up 0.3 per cent to 4,828.33.

    mamta.badkar@ft.com

    Twitter: @mamtabadkar