Smith & Wesson Holding Corp. reported non-GAAP fourth-quarter fiscal 2016 (ending Apr 30, 2016) earnings of 66 cents per share, beating the Zacks Consensus Estimate of 54 cents by an impressive 22.2%. Earnings escalated 46.7% from the year-ago figure of 45 cents per share on the back of higher sales.
Fiscal year earnings came in at $1.83 per share, up 79.4% from $1.02 a year ago.
Investors reacted positively to the company’s earnings beat with shares of the gun maker climbing 7.59% in late trading yesterday following the release. Shares of its rival, Sturm Ruger & Co. (RGR - Free Report) had also climbed 4.24% after its latest earnings release.
Total Revenue
Total revenue in the quarter was $221.1 million, beating the Zacks Consensus Estimate of $215.5 million by 2.6%. The top line increased 22.2% year over year driven by 22.4% revenue growth in the Firearm division to $203.7 million (92.1% of total revenue) and 19.8% growth in the Accessories division to $17.5 million (7.9% of total revenue).
Fiscal year revenue was $722.9 million, up 31% year over year. Firearms division sales increased 23.8% while Accessories unit’s revenues were boosted by $20.6 million.
Quarterly Operating Highlights
Gross profit in the quarter increased 37.2% year over year to $92.1 million. This corresponds to a gross margin of 41.6%, up 450 basis points (bps) year over year.
Operating expenses were $35.2 million (15.9% of revenues), up 18.1% from $29.8 million in the fourth quarter of fiscal 2015.
Operating income in the quarter was $56.9 million, up 52.5% year over year.
Financial Position
As of Apr 30, 2016, Smith & Wesson had cash and cash equivalents of $191.3 million, compared with $42.2 million as of Apr 30, 2015. The company ended the fourth quarter with no borrowings on its $175.0 million revolving line of credit.
Operating cash flow was $168.6 million in fiscal 2016, compared with $114.8 million a year ago. Free cash flow was $82.9 million in the fiscal fourth quarter compared with $80.7 million a year ago. This brought the free cash flow to $137.7 million in fiscal 2016, up substantially from $87.9 million a year ago.
Guidance
Smith & Wesson provided its fiscal first quarter as well as fiscal 2017 guidance.
For the fiscal first quarter, the company expects revenues of $190–$200 million. Non-GAAP earnings are expected in the range of 49–53 cents per share for the ongoing quarter.
For fiscal 2017, revenues are expected in the range of $740–$760 million, while non-GAAP earnings are anticipated in the range of $1.83–$1.93 per share.
Zacks Rank
Currently, Smith & Wesson has a Zacks Rank #4 (Sell). Smith & Wesson faces stiff competition from other firearm companies like Sturm, Ruger & Company and Vista Outdoor (VSTO - Free Report) . Outdoor sporting goods retailers Sportsman's Warehouse Holdings, Inc. (SPWH - Free Report) and Cabela’s Inc. also have major exposure to firearm sales.
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Smith & Wesson Holding Corp. reported non-GAAP fourth-quarter fiscal 2016 (ending Apr 30, 2016) earnings of 66 cents per share, beating the Zacks Consensus Estimate of 54 cents by an impressive 22.2%. Earnings escalated 46.7% from the year-ago figure of 45 cents per share on the back of higher sales.
Fiscal year earnings came in at $1.83 per share, up 79.4% from $1.02 a year ago.
Investors reacted positively to the company’s earnings beat with shares of the gun maker climbing 7.59% in late trading yesterday following the release. Shares of its rival, Sturm Ruger & Co. (RGR - Free Report) had also climbed 4.24% after its latest earnings release.
Total Revenue
Total revenue in the quarter was $221.1 million, beating the Zacks Consensus Estimate of $215.5 million by 2.6%. The top line increased 22.2% year over year driven by 22.4% revenue growth in the Firearm division to $203.7 million (92.1% of total revenue) and 19.8% growth in the Accessories division to $17.5 million (7.9% of total revenue).
Fiscal year revenue was $722.9 million, up 31% year over year. Firearms division sales increased 23.8% while Accessories unit’s revenues were boosted by $20.6 million.
Quarterly Operating Highlights
Gross profit in the quarter increased 37.2% year over year to $92.1 million. This corresponds to a gross margin of 41.6%, up 450 basis points (bps) year over year.
Operating expenses were $35.2 million (15.9% of revenues), up 18.1% from $29.8 million in the fourth quarter of fiscal 2015.
Operating income in the quarter was $56.9 million, up 52.5% year over year.
Financial Position
As of Apr 30, 2016, Smith & Wesson had cash and cash equivalents of $191.3 million, compared with $42.2 million as of Apr 30, 2015. The company ended the fourth quarter with no borrowings on its $175.0 million revolving line of credit.
Operating cash flow was $168.6 million in fiscal 2016, compared with $114.8 million a year ago. Free cash flow was $82.9 million in the fiscal fourth quarter compared with $80.7 million a year ago. This brought the free cash flow to $137.7 million in fiscal 2016, up substantially from $87.9 million a year ago.
Guidance
Smith & Wesson provided its fiscal first quarter as well as fiscal 2017 guidance.
For the fiscal first quarter, the company expects revenues of $190–$200 million. Non-GAAP earnings are expected in the range of 49–53 cents per share for the ongoing quarter.
For fiscal 2017, revenues are expected in the range of $740–$760 million, while non-GAAP earnings are anticipated in the range of $1.83–$1.93 per share.
Zacks Rank
Currently, Smith & Wesson has a Zacks Rank #4 (Sell). Smith & Wesson faces stiff competition from other firearm companies like Sturm, Ruger & Company and Vista Outdoor (VSTO - Free Report) . Outdoor sporting goods retailers Sportsman's Warehouse Holdings, Inc. (SPWH - Free Report) and Cabela’s Inc. also have major exposure to firearm sales.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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