Smith & Wesson Arms Us Right
Mary is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Smith & Wesson (NASDAQ: SWHC) announced on Monday that its preliminary fourth quarter sales of $129 million exceeded its own estimate of $113-$118 million. Also, Smith & Wesson's firearm backlog order increased to $439 million from $252 million. Smith & Wesson has also reported steady sales growth in the prior three quarters. The company stated that these figures were due to continued strength across its product line, namely its M&P brand weapons and the new concealable Shield 9mm. Shares of the gun maker's stock spiked 6% Monday after these figures were released. Prior to these new figures shares had fallen a sharp 28% this month.
Smith & Wesson is one of the largest gun maker's in the U.S. these days. They are a globally recognized manufacturer of quality firearms for enthusiasts, hunters, gun collectors, and military and police professionals. In addition to manufacturing and distributing their own firearms, Smith & Wesson also distributes Walther firearms, which are used for duty, personal protection, target shooting, and concealed carry. And in addition to providing the product, they also provide education and training. The company also provides security services ranging from barriers to monitoring.
In comparison, Smith & Wesson's competitor Sturm Ruger (NYSE: RGR) was not so lucky. As Smith & Wesson shares rose approximately 6%, Sturm Rugers's share price fell approximatley 6%. It appears as though they are on opposite ends of the spectrum. Perhaps shareholders saw Smith & Wesson's numbers as a sign that Sturm Ruger is losing market share. Ruger does have its individual problems, though. This gun maker has been riddled with supply constraints. At the end of March Ruger announced that it was not taking any more orders until it was able to fill the 1 million it already had. This is a regular sight. When election nears, some are afraid that the new president will tighten the gun control laws. So they stock up while they can. For the avid gun enthusiast gearing up for election season is the same as gearing up for war. Gun control is, and will always be a large part of the political landscape as long as guns exist. Whether or not one is for or against gun control in this country, 2012 leading up to the elections should be a great time to own shares in a gun maker, preferable Smith & Wesson. They seem to be keeping up with demand where Sturm Ruger is struggling. Ruger should have come into election season more prepared.
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