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American firearms manufacturer Smith & Wesson (NASDAQ:SWBI) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 9.9% year on year to $159.1 million. It made a GAAP profit of $0.57 per share, improving from its profit of $0.28 per share in the same quarter last year.
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Smith & Wesson (SWBI) Q1 CY2024 Highlights:
- Revenue: $159.1 million vs analyst estimates of $156.8 million (1.5% beat)
- Adjusted EBITDA: $36.0 million vs analyst estimates of $32.7 million (10.1% beat)
- EPS: $0.57 vs analyst estimates of $0.34 (67.6% beat)
- Gross Margin (GAAP): 35.5%, down from 36.5% in the same quarter last year
- Free Cash Flow of $38.05 million, up from $7.16 million in the previous quarter
- Market Capitalization: $743.7 million
With a history dating back to 1852, Smith & Wesson (NASDAQ:SWBI) is a firearms manufacturer known for its handguns and rifles.
Leisure ProductsLeisure products cover a wide range of goods in the consumer discretionary sector. Maintaining a strong brand is key to success, and those who differentiate themselves will enjoy customer loyalty and pricing power while those who don’t may find themselves in precarious positions due to the non-essential nature of their offerings.
Sales GrowthReviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one tends to sustain growth for years. Smith & Wesson had weak demand over the last five years as its sales fell by 3.3% annually, a rough starting point in our assessment of quality.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or emerging trend. Smith & Wesson's recent history shows its demand has stayed suppressed as its revenue has declined by 21.3% annually over the last two years.
This quarter, Smith & Wesson reported solid year-on-year revenue growth of 9.9%, and its $159.1 million of revenue outperformed Wall Street's estimates by 1.5%. Looking ahead, Wall Street expects sales to grow 7.9% over the next 12 months, a deceleration from this quarter.
Operating Margin
Smith & Wesson has done a decent job managing its expenses over the last two years. The company has produced an average operating margin of 10.7%, higher than the broader consumer discretionary sector.
In Q1, Smith & Wesson generated an operating profit margin of 15.9%, up 2 percentage points year on year. Looking ahead, Wall Street expects Smith & Wesson to become more profitable. Analysts are expecting the company’s trailing 12 month operating margin of 9.7% to rise to 12.6% in the coming year.
Key Takeaways from Smith & Wesson's Q1 ResultsWe were impressed by how significantly Smith & Wesson blew past analysts' EPS expectations this quarter. We were also excited its operating margin outperformed Wall Street's estimates. Zooming out, we think this was an impressive quarter that should delight shareholders. The stock is up 7.3% after reporting and currently trades at $17.60 per share.
