Smith & Wesson Holding Corp. reported better-than-expected results Tuesday and raised its annual outlook as investors expect a renewed gun debate in the U.S. to drive sales.
The company said it now expects sales between $625 million and $635 million for the fiscal year, up from a previous forecast of $610 million to $620 million. The gun maker also said it expects adjusted earnings for the year to land between $1.26 a share and $1.31 a share, up from a previous range of $1.14 to $1.19.
Shares of the gun maker have soared to eight-year highs this week as recent high-profile shootings in Paris and in California have stirred calls for more gun restrictions. The market expects gun supporters to stock up ahead of possible changes to laws.
A measure of U.S. consumer demand for guns showed strong growth in November. Criminal background checks linked to gun purchases were up 7.7% from a year earlier, said Chris Krueger of Lake Street Capital Markets, citing data from the National Shooting Sports Foundation.
He saw sales "accelerating in December as people get more and more concerned about safety and urban [and] global unrest."
On Sunday, President Barack Obama continued to make the case for a recently defeated proposal that would prevent people on no-fly lists with suspected links to terrorism from buying a weapon. Some say the government lists aren't reliable and such a move would impinge on Second Amendment rights of Americans incorrectly singled out.
Over all, the company posted a profit of $12.5 million, or 22 cents a share, up from $5.1 million, or nine cents a share a year earlier. Excluding certain items, adjusted earnings were 25 cents compared with 10 cents a year earlier.
Revenue climbed 32.1% to $143.2 million.
Analysts surveyed by Thomson Reuters forecast per-share earnings of 20 cents a share on revenue of $139 million.
The largest U.S. firearms' maker by revenue also plans to expand in the military market, targeting a U.S. Defense Department contract scheduled to be awarded in 2017 for almost 500,000 new pistols.
Consumer business accounts for 90% of the company's sales, and the military market offers opportunities for growth beyond domestic law enforcement, which buys around 100,000 firearms a year. Police and agents typically replace their guns every 10 years.
Springfield, Mass.-based Smith & Wesson is diversifying into hunting and shooting accessories—last year buying Battenfeld Technologies Inc.—and continues to look for acquisitions, executives said.
Shares of the company edged down 0.7% in after-hours trading.
By Ezequiel Minaya