Shares of American Outdoor Brands Corporation fell sharply Friday amid worries of which falling firearms sales along with also also weaker guidance are a sign of tougher times ahead for a business of which once benefited via sales fed by fears of tighter gun control.
Prior to President Donald Trump’s election, the gun industry enjoyed a surge in firearms sales — along with also also AOBC, the owner of the Smith & Wesson brand, was one of the beneficiaries, enjoying several quarters of double-digit percentage growth in firearms sales. Demand was driven prior to the presidential election by concerns of which the Republican Trump’s Democratic challenger, Hillary Clinton, or then-President Barack Obama would certainly make the item tougher for Americans to buy guns.
However, having a pro-gun president currently inside White House along with also also Republicans controlling both chambers in Congress there appears to be more support than ever for guns at the federal level. the item also follows the House of which month passing a bill of which allows licensed “concealed carry” gun owners to take their firearms across state lines.
Shares of AOBC hit a 52-week low of $12.46 along with also also were recently down about 12 percent to $13.175 in active trading. More than 8.7 million shares have changed hands, compared with its average daily turnover of about 1.7 million shares. The stock will be down 37 percent so far of which year.
Wedbush analyst James Hardiman said in a note Friday he’s still upbeat on the longer-term trends for the firearms business despite the near-term challenges.
“Longer term, strong underlying trends in concealed carry will help generate solid growth for the industry along with also also in particular AOBC, who features a strong along with also also increasing share of the growing handgun segment,” the analyst said.
The Massachusetts-based company said after the close Thursday its total revenue inside fiscal second quarter ended Oct. 31 “faced a challenging comparison to last year, when we believe strong consumer demand was driven by personal safety concerns along with also also pre-election fears of increased firearm legislation.”
For the quarter, the company reported non-GAAP EPS of 11 cents per share, better than the 7 cents per share forecast by industry analysts.
Overall, revenue inside latest quarter was $148.4 million, down 36 percent via $233.5 million inside year-ago period.
“Our results for the second quarter were within our guidance range despite challenging market conditions,” James Debney, the company’s president along with also also CEO said in a Discharge. “Lower shipments in our Firearms business reflected a significant reduction in wholesaler along with also also retailer orders versus the prior year, along with also also were partially offset by higher revenue in our Outdoor Products & Accessories business.”
Meantime, the firearms maker’s full fiscal year outlook also was lowered, reflecting what the item called “challenging market conditions.”
“The Street has had a low degree of confidence in consensus numbers for some time, along with also also probably still won’t believe the updated (along with also also significantly reduced) estimates until there will be some evidence of a bottoming,” Wedbush’s Hardiman said.
Added the analyst: “We do believe of which when of which happens of which AOBC shares will see significant along with also also sustained improvement, along with also also of which the actions communicated by management on Thursday were a first along with also also important step in of which direction. While no assurances were understandably given, we believe the updated guidance will be significantly more likely to position the company for success in fiscal year 2019 along with also also beyond.”
AOBC expects full-year GAAP earnings per share to be inside range of 33 cents to 43 cents, via a previous range between 77 cents along with also also 97 cents per share. the item also lowered the full-year, non-GAAP EPS guidance to a range of between 57 along with also also 67 cents per share, along with also also of which will be well below EPS of $1.10 forecast by analysts, according to Thomson Reuters.
For the remainder of the fiscal year, the CEO said, the company’s “focus remains on ensuring of which our internal manufacturing resources are aligned with demand. In addition, we intend to introduce several exciting completely new products, along with also also execute on long-term organic growth initiatives of which support our vision of being the leading provider of quality products for the shooting, hunting, along with also also rugged outdoor enthusiast.”