Smith & Wesson Profit Down, But Tops View; Outlook Weak

(RTTNews) - Firearms maker Smith & Wesson Holding Corp. (SWHC), Thursday reported a drop in profit for the fourth quarter, as a growth in revenues were offset by weak margins reflecting lower sales of guns. However, earnings for the quarter came in ahead of Wall Street estimates as did revenues.

Moving ahead, the company projected a weak outlook for the first quarter and the full-year 2016.

Springfield, Massachusetts-based Smith & Wesson's fourth-quarter profit dropped to $21.9 million or $0.40 per share from $25.1 million or $0.44 per share last year.

Excluding items, adjusted earnings from continuing operations for the quarter dropped to $0.45 per share from $0.47 per share a year ago. Analysts polled by Thomson Reuters expected earnings of $0.35 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Smith & Wesson, which other than its namesake brand, also sells M&P and Thompson/Center Arms, said sales for the fourth quarter rose 6.2 percent to $181.0 million from $170.4 million a year ago. Analysts had a consensus revenue estimate of $175.49 million for the fourth quarter.

Firearm division sales decreased by 2.4 percent, however, was offset by $14.6 million of sales from the company's new accessories division. Smith & Wesson had acquired Battenfeld Technologies Inc. on December 11, 2014.

Gross margin, or percentage of sales left after deducting production costs, dropped to 37.1 percent from 40.9 percent last year. Operating expenses, as a percent of sales, rose to 16.5 percent from 15.6 percent last year.

Looking forward to the first quarter, the company sees adjusted earnings of $0.21 to $0.23 per share and sales of $140 million to $145 million. Analysts currently expect earnings of $0.25 per share on revenues of $145.35 million for the first quarter.

For the fiscal year 2016, the company has forecast adjusted earnings of $1.02 to $1.07 per share and sales of $605 million to $615 million. Analysts currently expect earnings of $1.07 per share on revenues of $601.77 million for 2016.

SWHC closed Thursday's trading at $16.10, up $0.32 or 2.03%, on the Nasdaq. The stock, however, slipped $0.50 or 3.11% in after-hours.