Smith & Wesson Brands, Inc. (SWBI) stock prices were down by 12.63% shortly after market trading commenced on July 2nd, 2021, bringing the price per share down to USD$30.93 early on in the trading day.
Easing of Firearm Regulations
July 1st, 2021 saw the company’s stock start to rise following the easing of regulations making it easier to carry guns in public effect. The move came into effect across three different U.S. States: Iowa, Tennessee, and Wyoming. Despite Tennessee already ranking as one of the most violent states in the U.S, the list of states where the minimum age for carrying handguns without a permit is 21 is growing. Texas is set to join the list in September 2021.
Scope of Market
The U.S. has seen increased and prolonged buying activity amid the tensions created by the outbreak of the coronavirus pandemic, as well as the civil unrest across the nation over the Summer. March 2020 saw weekly federal background checks top 1 million, serving as a crude indicator of purchases. This is the first time the million mark has been exceeded since the government began tracking background checks in 1998. The record-breaking week saw 1.2 million background checks being conducted. NYT quoted data indicates 20% of all Americans who bought last year identifying as first-time gun owners.
Quarterly Sales Report
Quarterly net sales came in at USD$322.9 million in the fourth quarter of the fiscal year 2021, a sizeable 67.3% increase over the USD$193 million reported for the fourth quarter of fiscal 2020. Gross margin for the quarter was reported at 45.1%, up from the 32.2% reported for the prior-year quarter. GAAP net income for the quarter broke records at USD$89.2 million, representing a GAAP net income of USD$1.70 per diluted share.
Full Year Non-GAAP Net Income
Full-year non-GAAP net income for 2021 was reported at USD$251.5 million, representing USD$4.54 per diluted share. This is a massive increase over the USD$32.1 million reported for the prior year, which represented a non-GAAP net income of USD$0.58 per diluted share. GAAP to non-GAAP adjustments for income do not include expenses associated with the spin-off of the outdoor products and accessories business, Covi-18 related expenses, and other costs.
Future Outlook for SWBI
Armed with the easing of regulations and the strength of its financial reports, SWBI is poised to continue the trajectory of its success over fiscal 2021 into fiscal 2022 and beyond. Investors are hopeful that management will capitalize on the expanded scope of the market available to SWBI.
