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Smith & Wesson (SWBI) to Post Q2 Earnings: What's in Store?

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Smith & Wesson Brands, Inc. (SWBI - Free Report) is scheduled to report second-quarter fiscal 2022 results, after market close on Dec 2.

In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate but revenues missed the same. On a year-over-year basis, earnings and revenues grew 103.9% and 19.5%, respectively.

Smith & Wesson’s earnings topped the consensus mark in the last four quarters, the average surprise being 46.8%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share has been unchanged at $1.37 over the past 60 days. Nonetheless, this indicates an increase of 47.3% from the year-ago quarter. The consensus estimate for revenues is pegged at $277.9 million, suggesting 11.7% year-over-year growth.

Factors to Note

Smith & Wesson is a leading firearm manufacturer and designer, boasting a broad portfolio of quality firearms, related products and training to the global military, law enforcement and consumer markets.

Notably, the FBI's National Instant Criminal Background Check System (NICS) showed comparatively high background checks this year against inflated demand a year ago related to the pandemic. The NSSF-adjusted figure was 1.43 million in October 2021 compared with 1.77 million in October 2020. Through the first 10 months of 2021, the total NSSF-adjusted NICS reflects a decrease of 11.9% year over year.

Even with the difficult comps versus the solid results from last year, increased manufacturing capacity due to the company’s flexible model as well as increased market share and consumer preference for products have been driving the company’s sales.

Overall, sustained market share growth, various product launches, including entry into a brand new category, various marketing campaigns, GUNSMARTS, rebranding efforts, consumer research studies, will reflect in the company’s quarterly performance.

The company has been executing a strategy to streamline business operations and increase flexibility and cost-saving initiatives, contributing to significant margin expansion.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Smith & Wesson this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

3 Solid Consumer Discretionary Picks

Some top-ranked stocks in the Consumer Discretionary sector are Hilton Grand Vacations Inc. (HGV - Free Report) , Bluegreen Vacations Holding Corporation (BVH - Free Report) and Camping World Holdings, Inc. (CWH - Free Report) .

Hilton Grand Vacations sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 411.1%, on average. Shares of the company have increased 51.5% so far this year.

The Zacks Consensus Estimate for Hilton Grand Vacations’ current financial year sales and earnings per share (EPS) suggests growth of 222.13% and 170.8%, respectively, from the year-ago period’s levels.

Bluegreen Vacations flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 695%, on average. Shares of the company have surged 119.7% so far this year.

The Zacks Consensus Estimate for Bluegreen Vacations’ current financial-year sales and EPS indicates a rise of 27.5% and 199.3%, respectively, from the year-ago period’s levels.

Camping World carries a Zacks Rank #2. The company benefits from the launch of a fresh peer-to-peer RV rental marketplace and a mobile service marketplace. It has been investing heavily in product development.

Camping World has a trailing four-quarter earnings surprise of 70.9%, on average. Shares of the company have appreciated 68.4% so far this year. The Zacks Consensus Estimate for CWH’s financial-year sales and EPS suggests growth of 25.9% and 77.1%, respectively, from the year-ago period’s levels.