Smith & Wesson's Biggest Win in 2016
Smith & Wesson may now be known as American Outdoor Brands (NASDAQ: AOBC), to better reflect its jumping with both feet into the rugged outdoors market, but it was still its firearms business that carried the company forward in 2016.
Image source: ThompsonCenter.
Growing importance of rifles
With the introduction of several popular modern sporting rifles, or MSRs, to its firearms portfolio, the Smith & Wesson division made big strides in bolstering its long-gun business, which has always taken a back seat to its storied handguns. Last January, for example, it introduced the M&P15-22 Sport MSR, an updated version of its wildly popular M&P 15-22 that challenges head-onSturm, Ruger's (NYSE: RGR) ubiquitous 10-22 as the most popular .22 rifle on the market.
In fact, it was this particular rifle that received credit for helping in part to double long-gun sales for Smith & Wesson over the past two quarters.And where the firearms manufacturer's earnings totaled $723 million in 2016, it estimates it will earnbetween $920 million and $930 million by the end of fiscal 2017, a significant increase to the $900 million to $920 million range it previously guided toward.
Even so, long guns represent less than 25% of total firearm sales, and less than 20% of American Outdoor Brands' total revenue. It is Smith & Wesson's handguns that pad sales and profits for the gunmaker, even if the percentage rate increases didn't match those of the rifles, and it's in those handgun sales where you can find Smith & Wesson's biggest win for the year.
Smith & Wesson Calendar Year 2016 Firearms Revenue
Data source: American Outdoor Brands quarterly SEC filings. Dollar figures in millions.
A professional choice
First introduced in 2005, the M&P brand -- short for military and police -- was developed with professionals in mind, and while hundreds of law-enforcement agencies use M&P firearms today, the platform has filtered down through the consumer ranks and is now widely available everywhere.
M&P pistols are polymer-framed semiautomatics that were designed to compete directly against Glock, Heckler & Koch, and Springfield XD poly semiautos, and were immediately hailed for their improved, interchangeable grips and trigger pull.
Image source: Smith & Wesson.
Today the M&P brand extends to long guns, too, as noted, and to some of Smith & Wesson's most popular handguns, including the M&P Shield and M&P Bodyguard. The Shield was introduced in 2012 as a compact pistol designed for concealed carry. It immediately rocketed to the forefront of the market, and the gunmaker quickly manufactured and sold well over 1 million Shield pistols. Smith & Wesson followed that up two years later with the Bodyguard, which was designed for similar purposes, and it, too, has proved popular with gun buyers.
Maybe it should be called "Money & Profits"
American Outdoor Brands derives the majority of its revenue from the M&P platform. By continuing to expand and extend its value across all of its product lines, M&P has become an invaluable asset to the firearms maker, and the platformincludes rimfire training rifles, target and hunting pistols and rifles, and an expanded inventory of concealed-carry weapons.
Indeed, it looks as if it's going to continue that level of innovation, since the very first product American Outdoor issued in 2017 was the Smith & Wesson M&P M2.0, a feature-rich, full-size handgun that will be offered in 9mm, 40S&W, and .45 Auto versions.
So if you're looking for Smith & Wesson's biggest win in 2016, then look no further than its M&P platform.
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Rich Duprey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.