World’s Top Gun Maker Sees Shares Soar Following Obama’s Executive Order
Shares in gun manufacturer Smith & Wesson soared to their highest level ever after President Barack Obama announced new restrictions on gun sales intended to reduce the country’s mass shootings.
Smith & Wesson shares surged by more than 11% on Tuesday to end the day at a new high of $25.86. Earlier that day, shares had reached $26.54, the highest value since February 1999. The rise followed a nearly 6% gain on Monday.
The world’s largest gun company told investors that it expected sales to spike after news broke last Thursday of President Obama’s plan to announce executive actions to tighten US gun control laws.
The company, which makes a third of all revolvers owned in the United States, said sales had been so strong that some distributors were beginning to run out of some of its most popular guns.
“The sell-through rate of its products at distribution has been stronger than originally anticipated, resulting in reduced distributor inventories of its firearms,” the company said in a statement on Monday night.
Smith & Wesson said sales for the quarter ending January 31 are expected to be at $175-180 million. That is up from its previous estimate of $150-155 million. Annual revenues are expected to total $650-660 million, up from last year’s $627 million.
— Michael Skolnik (@MichaelSkolnik) January 5, 2016
Shares in Sturm, Ruger & Company, the nation’s other major listed gun company, rose by 7.4% to $66.
Brian Ruttenbur, an analyst at BB&T Capital Markets, upgraded Smith & Wesson from “hold” to “buy.”
“Many demand drivers (presidential elections, potential regulations, and new product introductions) should allow for very strong top- and bottom-line growth for [Ruger],” he said in a research note.