Smith & Wesson Surges Amid Buyback Plan, Profit

Smith & Wesson Holding Corp. (SWHC) surged the most in almost five months after announcing a $100 million stock repurchase plan and reporting preliminary profit that was higher than analysts had estimated.

The stock rose 5.2 percent to $9.78 at the close in New York, for the biggest one-day jump since Jan. 16. Smith & Wesson, the second-largest U.S. gunmaker by market value, has added 16 percent this year.

Smith & Wesson and competitor Sturm Ruger & Co. (RGR), which sell military-style assault weapons, saw some public pension funds dump their stocks after a gunman used a similar firearm in the December shootings in Newtown, Connecticut. However, Smith & Wesson has benefited from an increase in demand for weapons after the killings prompted a gun-control push by the Obama administration, which fueled better-than-expected quarterly profit, Wedbush Securities Inc. analyst Rommel Dionisio said.

“What really helped drive the upside in this particular quarter is that this company ran at manufacturing capacity over the last few months to better meet this record demand,” he said.

Investors are also buying following the stock-repurchase announcement, said Dionisio, who rates the shares the equivalent of hold.

Profit for the three months ended April 30 was probably 44 cents a share, a record, compared with 27 cents a year earlier, Springfield, Massachusetts-based Smith & Wesson said in a statement yesterday after the markets closed. That compared with an average estimate of 40 cents, according to data compiled by Bloomberg.

Quarterly Sales

Revenue was $179 million, up about 38 percent from the year-earlier period. Analysts had projected $170.6 million.

The $100 million repurchase plans replaces a $15 million program announced in December 2012, according to a separate statement.

Sturm Ruger, the biggest gunmaker by market value, added 0.9 percent to $46.89, for a 3.3 percent gain this year.

To contact the reporter on this story: Leslie Picker in New York at lpicker2@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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