OTT S&W (courtesy tactical-life.com)

“Shares of gun manufacturer Smith & Wesson plunged this week,” investorguide.com reports, “despite reporting third quarter earnings that surprisingly more than tripled from the prior year quarter.” The Great Gun Surge has pumped-up the volume on the gunmaker’s bottom line. Revenues rose 38.8% ($136.2m). Profits soared by 26 cents per share ($14.6 million). That’s a 228% increase from the prior year quarter. To say Smith & Wesson Security Solutions has been a drag on profits would be like saying Rosie Huntington-Whitely would look good holding a double barreled shotgun. Which Smith doesn’t make. Anyway, S&W tried dumping the division. In January they inked a $63m contract with the U.S. Army Engineering and Supporter Center. So that’s good too. What’s not so good . . .

Wedbush securities Rommel Dionisio stated that a ban on assault rifles would impact Smith & Wesson’s earnings by up to 40 cents per share for the year. Military & Police tactical rifles would immediately be banned, which currently generate 20% of Smith & Wesson’s annual sales. A ban on high capacity magazines would also “severely hamper” sales of several of the company’s pistols, stated Dionisio.

With the possibility of a federal assault weapons ban dead in the water—unless another spree killer lets loose with a modern sporting rifle in the near future—you’d think analysts would discount a discount.

Saying that, New York’s enhanced AR ban signals the beginning of the end for S&W’s AR sales in a half dozen states or so. So . . . what about a Smith & Wesson ban on AR and pistol sales to law enforcement agencies in the gun ban states?

Nope. Not unless consumers put pressure on Smith to get with the program. But maybe then, as the company’s collective conscious surely remembers the punishment owners meted out to S&W when they last played footsie with the gun grabbers.

Watch this space.

26 Responses to Smith & Wesson Shares Hit by Assault Rifle Ban Fears

  1. “With the possibility of a federal assault weapons ban dead in the water…”

    Don’t count your chickens before they’re hatched.

    • FEDERAL assault weapons ban will not likely pass, but STATE bans likely will (and have) passed. Bills are pending in NJ, Co., Ca., Ma., and probably a few more I can’t remember right off. Conn. is still trying to make up its mind whether to introduce a bill, but it seems likely. The bills proposed in Wa. and Or. are nonstarters.

      • I am pretty sure that a bill was filed in Florida today. Although I give it about as much of a chance of passing as a bill to require anger management before buying ammo.

  2. I’m not sure what plunged means when SWHC closed last Friday @ 9.82 and today at 9.77 for a whopping .5% drop.

  3. Delaware is working on a ban on “weapons of war that have no place on our streets,” to quote our Democratic governor who would like to be President and feels himself slipping in the horse race behind Mr. Cuomo, Mr. O’Malley, Mr. Hickenlooper, et al., and (in the interest of equal time) Mr. Christie.

    • I can’t wait to vote these tyrants out of office. Every single gun owner I knew feels that way. And while the Democrats don’t realize this, I would say that about 40% of these people are Democrats (That’s about 40MM voters). The Democrats are going to face the wrath come election season. Might be the best thing that will happen to our country in some time.

      • Yep. And the empty gun-store shelves in CA aren’t because the local Republicans have bought up all the stuff — I’m certain that there are a LOT more gun owners in CA today than there were 12 months ago.

  4. “To say Smith & Wesson Security Solutions has been a drag on profits would be like saying Rosie Huntington-Whitely would look good holding a double barreled shotgun.”

    I find this illogical.. After all, everyone looks better with a shotgun .. particularly if they already are easy on the eyes!

  5. If it will help their stock price, I will gladly buy one of the rifles shown in the picture above, minus the laser target designator.

    I like living in CA (mostly) but it sure would be nice to live someplace where full-cap mags, no bullet buttons, SBRs, and suppressors were all totally cool…

  6. sell the news bro. It’s like clockwork. It just happens.
    anyway, 26% of the floated shares are sold short, i’d bet a paycheck that Wedbush is in on some of that.
    A company with a 36% gross margin, low PE ratio, 300% growth in earnings, 1 year backlog, and the hottest commodity on the market? Wedbush gives them a ‘neutral’ rating and negative outlook? Which side of the trade are they on?
    Don’t hate the player, just play the game.

  7. With the possibility of a federal assault weapons ban dead in the water

    Hardly. The Democrats have the votes in the Senate and probably in the House, too. The only question is whether the AWB will come to the Senate floor needing 51 votes or 60. Thy probably don’t have 60 votes, but they might.

    If smart investors can see which way the wind blows, maybe we should pull our heads out of the sand and pay attention.

  8. I think we do need to pressure S&W to join Olympic Arms in saying no to NY fascists. Glad to see S&W getting good profits this year though.

    • Coincidentally, I just saw a website listing for a 30rd PMAG blocked to 7 rounds today. $45. Yowza.

  9. Plunge? Stock analysts seem to have the need to write with all the histrionics of some gun writers that say the world (gun ownership) is coming to an end. I wouldn’t call a 1.31% drop a plunge. More like a small dip. Christ, the yearly high was 11.02 back in September! If they want to know about stocks that have plunged just ask me. I have owned plenty of them! Save the word plunge for drops of 30% or more please.

    Still at under 10 I couldn’t help but buy a couple thousand shares. I have no idea if it is a good investment. It all depends on state and federal politics and who can predict that? However, I like to have what I refer to as a sentimental buy now and then. That is a company I like and am interested in. One where the CEO cares about the product and wants to make a good product for the consumer. I think S&W is such a company and I can afford to lose $20K if somehow the company went belly up which I sincerely doubt. Fun money for fun investments. One can’t just live by the numbers all the time.

  10. The stock is more or less flat over the last year, about how long the “Obama” gun run has been going on.

    Now is the time to buy. One of their chief competitors, Bushmaster is going to be in disarray for a little while allowing Smith to pick up Marketshare if they try. Mind you companies like Colt etc will pick up some as well, this is as good an opportunity to pick up new customers. That and the fact S&W has the best warranty in the industry should make for a healthy new crop of gun owners.

  11. I hope that TTAG is not out to pick on Smith & Wesson (S&W) with boycotts if they continue to sell their products to law enforcement agencies in states with firearm bans. S&W may already have contractual obligations with police agencies in those states. Let’s be honest, the Military & Police (M&P) line is targeted to specific groups/professions of people. For arguments sake, let’s assume that S&W was able or willing to stop sales in firearm restricted/banned states. All that would happen is that another manufacturer would fill the void. Given that, S&W may as well take the money. Anyway, S&W does not want to see any ban of any type on the citizenry since it translates into a loss of profits. In addition, large companies such as S&W contribute to the NRA. To boycott S&W may inadvertently hurt 2nd Amendment rights. S&W’s bottom line is already being threatened by various State and Federal legislation, gun owners don’t need to add to this threat.

  12. We must not let our guard down they are going to let ppl think the AWB bill is dead just like they did with Obumacare. Then BOOM!! In the middle of the night behind closed doors it passes. Done been in that barn and smelled that crap.

  13. Seems like the time to invest… a couple ways. Maybe pick up a little bit of stock. And also one of their sw1911 pro series sub-compacts. Only problem with that is that TTAG hasn’t done a review of that particular model. How do I know the truth about it!!

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