Stronger gun sales catapult Smith & Wesson owner's stock

An exhibit booth for firearms manufacturer Smith & Wesson is seen on display at the International Association of Chiefs of Police conference in Chicago, Illinois, October 26, 2015.

American Outdoor Brands reported quarterly earnings and sales that beat expectations, pushing the stock sharply higher late Thursday.

The maker of Smith & Wesson firearms said it earned $7.6 million in net income during the company’s fiscal first quarter, bouncing back from a loss of $2.2 million in the same period a year ago. Excluding one-time items, adjusted earnings per-share climbed to 21 cents from 2 cents. Wall Street analysts had estimated an adjusted profit of 12 cents a share.

Net sales jumped 7.6 percent to $138.8 million, surpassing the consensus estimate of $134.5 million. The firearms segment saw revenue grow 5.9 percent.

American Outdoor Brands also issued guidance for second-quarter earnings of 11 cents to 15 cents a share. That’s better than the 8 cents a share that analysts anticipated.

Shares surged 20 percent in after-hours trading Thursday. The stock has dropped more than 23 percent since the start of the year.

In a statement, American Outdoor Brands CEO James Debney attributed the earnings increase to a decline in promotional discounts, cost cuts and robust consumer demand for new Smith & Wesson products.

Ticker Security Last Change Change %
AOBC n.a. n.a. n.a. n.a.
RGR STURM RUGER & CO. INC. 42.47 -0.31 -0.72%

American Outdoor Brands has sought to diversify its product portfolio in an effort to reduce its exposure to the gun industry’s boom-and-bust cycles. The company has made several acquisitions in recent years including Crimson Trace, which makes laser sights.

Gun demand was strong in the months leading up to the 2016 presidential election, but sales have turned soft since President Donald Trump took office, as buyers have become less concerned about new restrictions. During American Outdoor Brands’ previous fiscal year, revenue from the sale of long guns fell 50 percent compared to the previous year, according to data cited by The Wall Street Journal. Sturm, Ruger & Co. has also seen a decline in sales.

Dick’s Sporting Goods on Wednesday reported weaker same-store sales in its latest quarter, citing in part the retailer’s decision to tighten rules for gun purchases in its stores following the Parkland, Florida, school shooting.