Smith & Wesson (SWBI) earnings release for the 4th quarter of their 2020 fiscal year
Category: Stock Market and Smith & Wesson
Date: 22 June 2020 Stock Price: $17.70 We take a look at the 4th quarter earnings for their 2020 fiscal year of Smith & Wesson (SWBI) formerly known as American Outdoor Brands. During the 4th quarter of their 2020 fiscal year the group's net sales topped $230 million.
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- While fiscal 2020 presented challenges that included the impact of increased tariffs and disruptions caused by a global pandemic, we saw consistent point-of-sale growth for our hunting, shooting, and cutlery products with brick-and-mortar customers "
About Smith & Wesson
Smith & Wesson Brands, Inc. (NASDAQ Global Select: SWBI) is a provider of quality products for shooting, hunting, and rugged outdoor enthusiasts in the global consumer and professional markets. The Company reports two segments: Firearms and Outdoor Products & Accessories. Firearms manufactures handgun, long gun, and suppressor products sold under the iconic Smith & Wesson®, M&P®, Thompson/Center Arms™, and Gemtech® brands, as well as provides forging, machining, and precision plastic injection molding services. Outdoor Products & Accessories is an industry leading provider of shooting, reloading, gunsmithing and gun cleaning supplies, specialty tools and cutlery, and electro-optics products and technology for firearms. This segment produces innovative, top quality products under the brands Caldwell®; Crimson Trace®; Wheeler®; Tipton®; Frankford Arsenal®; Lockdown®; BOG®; Hooyman®; Smith & Wesson® Accessories; M&P® Accessories; Thompson/Center Arms™ Accessories; Performance Center® Accessories; Schrade®; Old Timer®; Uncle Henry®; Imperial®; BUBBA®; UST®; and LaserLyte®
Overview of Smith & Wesson's 4th quarter 2020 earnings report
The numbers we are interested in (for the quarter):
- Net sales: $233.683 million (up from $175.734 million from the same quarter of the previous year)
- Net sales increased by 32.9% over the last 12 months
- Cost of sales : $152.294 million (up from $112.369 million for the same quarter of the previous year)
- Cost of sales increased by 35.5% over the last 12 months
- Net loss: -$66.144 million (down from from $9.825 million for the same quarter of the previous year)
- Diluted loss per share: -$1.20 (down from $0.18 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 55.177 million (down from 55.286 million for the same quarter of the previous year)
- PE ratio of Smith & Wesson: Since the group is loss making we cannot calculate a PE ratio
- Cash and cash equivalents: $125.398 million
- Cash and cash equivalents per share: $2.72
- Cash and cash equivalents makes up 8.7% of Smith & Wesson's current market capital
- Cash and cash equivalents makes up 17.2% of Smith & Wesson's total assets
- Inventories: $164.191 million
- Inventories makes up 22.5% of Smith & Wesson's total assets
- Total stockholders' equity of Smith & Wesson: $387.118 million
- Stockholders' equity per share: $7.015
- So Smith & Wesson (SWBI) is trading at 2.52 times its stockholders equity per share which is within the expected range of between 2 and 4 times that most firms tend to trade at
- The average price to book value of firms in the S&P 500 is 3.7
Management commentary on their 1st quarter 2021 earnings report
SPRINGFIELD, Mass., June 18, 2020 /PRNewswire/ -- Smith & Wesson Brands, Inc. (NASDAQ Global Select: SWBI), one of the world's leading providers of firearms and quality products for the shooting, hunting, and rugged outdoor enthusiast, today announced financial results for the fourth quarter and full year fiscal 2020, ended April 30, 2020.
Brian Murphy, co-President and co-Chief Executive Officer, commented, "While fiscal 2020 presented challenges that included the impact of increased tariffs and disruptions caused by a global pandemic, we saw consistent point-of-sale growth for our hunting, shooting, and cutlery products with brick-and-mortar customers, as well as strong growth from our newly implemented e-commerce platform. In addition, we achieved a number of key objectives in our Outdoor Products & Accessories segment and made significant progress on our preparations to spin-off the business as a standalone, publicly traded company in August. During the year, we launched over 300 new products and extensions, some of which represent our entry into completely new product categories, such as meat processing. We believe our strong brand portfolio and new e-commerce platform were instrumental in allowing us to deliver fourth quarter revenue growth of 2.4%, as consumers responded to retail store closures by seeking out our popular brands and products online."
Brian Murphy, co-President and co-Chief Executive Officer, commented, "While fiscal 2020 presented challenges that included the impact of increased tariffs and disruptions caused by a global pandemic, we saw consistent point-of-sale growth for our hunting, shooting, and cutlery products with brick-and-mortar customers, as well as strong growth from our newly implemented e-commerce platform. In addition, we achieved a number of key objectives in our Outdoor Products & Accessories segment and made significant progress on our preparations to spin-off the business as a standalone, publicly traded company in August. During the year, we launched over 300 new products and extensions, some of which represent our entry into completely new product categories, such as meat processing. We believe our strong brand portfolio and new e-commerce platform were instrumental in allowing us to deliver fourth quarter revenue growth of 2.4%, as consumers responded to retail store closures by seeking out our popular brands and products online."
Spin-Off Update and Financial Highlights
Jeffrey D. Buchanan, Chief Financial Officer, commented, "During the quarter, we changed our company name from American Outdoor Brands Corporation to Smith & Wesson Brands, Inc. and our ticker symbol from AOBC to SWBI in preparation for the spin-off of our outdoor products and accessories business as a tax-free stock distribution to stockholders. On track for completion in August, and subject to final approval by our Board of Directors and customary regulatory approvals, the spin-off will create two independent, publicly traded companies: Smith & Wesson Brands, Inc. (the firearm business) and American Outdoor Brands, Inc. (the outdoor products and accessories business)."
"During the fourth quarter, we had operating cash flow of $120.0 million, thus reducing our net debt by that amount. As a result, at the end of our fiscal year, our balance sheet remained very strong with approximately $125.0 million of cash and $160.0 million outstanding on our revolving line of credit, resulting in net debt of only $34.0 million. Since the end of the quarter, we have used our strong cash position to pay down an additional $65.0 million on our revolving line of credit."
Jeffrey D. Buchanan, Chief Financial Officer, commented, "During the quarter, we changed our company name from American Outdoor Brands Corporation to Smith & Wesson Brands, Inc. and our ticker symbol from AOBC to SWBI in preparation for the spin-off of our outdoor products and accessories business as a tax-free stock distribution to stockholders. On track for completion in August, and subject to final approval by our Board of Directors and customary regulatory approvals, the spin-off will create two independent, publicly traded companies: Smith & Wesson Brands, Inc. (the firearm business) and American Outdoor Brands, Inc. (the outdoor products and accessories business)."
"During the fourth quarter, we had operating cash flow of $120.0 million, thus reducing our net debt by that amount. As a result, at the end of our fiscal year, our balance sheet remained very strong with approximately $125.0 million of cash and $160.0 million outstanding on our revolving line of credit, resulting in net debt of only $34.0 million. Since the end of the quarter, we have used our strong cash position to pay down an additional $65.0 million on our revolving line of credit."
Smith & Wesson (SWBI) stock price history
The image below, obtained from Google shows At Home Group (NYSE: HOME) stock price since their listing in August 2016. And its not been a very good time for At Home stockholders. At listing the stock was trading at $15.30 and its currently trading at $7.77. Thats a loss of -% suffered by At Home stockholders since their listing.
The stock of At Home is trading at a lot closer to its 52 week high of $10.55 than it is to its 52 week low of $1.20, which to us is a clear indication that the short term sentiment and momentum of At Home (HOME) stock is positive at this point in time.
The stock of At Home is trading at a lot closer to its 52 week high of $10.55 than it is to its 52 week low of $1.20, which to us is a clear indication that the short term sentiment and momentum of At Home (HOME) stock is positive at this point in time.
Recent coverage of Smith & Wesson (SWBI)
The extract below covers the latest from At Home as obtained from Fool.com
What happenedShares of gunsmith Smith & Wesson Brands (NASDAQ:SWBI) surged in Monday trading to close up an even 11% after the U.S. Supreme Court declined to review appeals challenging:
So what"But wait!" you say. Aren't laws restricting firearms sale and use bad news for a gunmaker?
Well, you might think so. But perhaps perversely, the historical effect of laws aiming to restrict "gun rights" has been to increase interest in gun ownership. Maybe it's a simple matter of forbidden fruit tasting sweetest, but whenever gun owners (present or prospective) sense a tightening of gun restrictions is at hand, their instinct is often to rush to the store to buy more guns before that right is taken away.
Read the full article here
What happenedShares of gunsmith Smith & Wesson Brands (NASDAQ:SWBI) surged in Monday trading to close up an even 11% after the U.S. Supreme Court declined to review appeals challenging:
- Restricting the right to "open carry" firearms in Maryland, Massachusetts, and New Jersey.
- A California handgun law.
- Bans on the sale of certain semi-automatic firearms and large-capacity magazines in Massachusetts.
- A federal law banning interstate handgun sales.
So what"But wait!" you say. Aren't laws restricting firearms sale and use bad news for a gunmaker?
Well, you might think so. But perhaps perversely, the historical effect of laws aiming to restrict "gun rights" has been to increase interest in gun ownership. Maybe it's a simple matter of forbidden fruit tasting sweetest, but whenever gun owners (present or prospective) sense a tightening of gun restrictions is at hand, their instinct is often to rush to the store to buy more guns before that right is taken away.
Read the full article here
Smith &Wesson (SWBI) latest stock valuation
So what is Smith & Wesson (SWBI) stock worth considering their latest earnings release? Based on their 4th quarter earnings release our valuation models set a target price (full value price) for Smith & Wesson of $21.10 a stock. We therefore believe Smith & Wesson stock is undervalued.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $21.10,a good entry point into the stock of Smith & Wesson would therefore be at $19 or below.
We expect that the stock of Smith & Wesson will kick upwards from its current price to levels closer to our target price/ full value price in coming weeks and months. Since the stock of Smith & Wesson is trading at well below our suggested entry point we rate the stock of Smith & Wesson (SWBI) as a buy.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $21.10,a good entry point into the stock of Smith & Wesson would therefore be at $19 or below.
We expect that the stock of Smith & Wesson will kick upwards from its current price to levels closer to our target price/ full value price in coming weeks and months. Since the stock of Smith & Wesson is trading at well below our suggested entry point we rate the stock of Smith & Wesson (SWBI) as a buy.
Next earnings release of Smith & Wesson (SWBI)
It is expected that Smith & Wesson (SWBI) will release their 1st quarter 2021 earnings report in middle September 2020