Does the Street Have Smith & Wesson Holding Figured Out?

Smith & Wesson Holding (Nasdaq: SWHC ) is expected to report Q4 earnings June 30. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Smith & Wesson Holding's revenues will grow 8.9% and EPS will expand 750.0%.

The average estimate for revenue is $121.7 million. On the bottom line, the average EPS estimate is $0.17.

Revenue details
Last quarter, Smith & Wesson Holding reported revenue of $98.1 million. GAAP reported sales were 24% higher than the prior-year quarter's $79.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $0.08. GAAP EPS were $0.07 for Q3 against -$0.88 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 30.9%, 640 basis points better than the prior-year quarter. Operating margin was 10.9%, 1,330 basis points better than the prior-year quarter. Net margin was 4.5%, 7,120 basis points better than the prior-year quarter.

Looking ahead
The full year's average estimate for revenue is $405.0 million. The average EPS estimate is $0.30.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 816 members out of 880 rating the stock outperform, and 64 members rating it underperform. Among 198 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 185 give Smith & Wesson Holding a green thumbs-up, and 13 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Smith & Wesson Holding is buy, with an average price target of $6.50.

Over the decades, small-cap stocks, like Smith & Wesson Holding have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Report this Comment On July 01, 2012, at 8:36 PM, kahunacfa wrote:

Just like the company Sturm Ruger(RGR) well over a decade ago, when I first started accumulating the shares for two reasons: 1. The about four perent dividend yield, the four or five Price/Earnings ratio(P/E), and 2. One of the better quality firearms manufacturers, producing premium quality, unique products, not to mention the company's Investment Casting technology used for firearms production and eventually for Callaway(R) Golf clubs under contract. Did I add that there was also reasonable low double digit eanings growth?
Sturm Ruger was a small-capitalization, even micro-capitalization, undiscovered GEM in the rough that I discovered the old-fashoned way <An Old Smith Barney Line>. I used the company's GREAT products also knew Bill Ruger, the founder.
Now, of course there is Smith & Wesson Holding Company(SWHC), an even more Iconic name than Ruger. Smith & Wesson also manufacturers the Walther PPK, yes, Bond, James Bond, 007!!!
I own several PPKs, several Ruger products, and of course a Colt Officer's Model 1911 A1a, bought as a side-arm after earning and receiving an Officer's Comission, December 1968. Next, off to Staff CINCPAC, Honolulu, Hawaii for three years.
Life was good for a then young new Officer.
Sturm Ruger(RGR) now trades above forty dollars per share -- your basic ten bagger. With Second Admendment fear issues <The ARA> http://NRA.org, and new Supreme Court appointments looming ahead, there is almost panic gun buying before the November election.
An Obama will be just more fuel on the fire demand for firearms, both new as well as used at a big discount to new.
Disclosure: Large positions in all companies mentioned. Still adding to SWHC. Ruger on the fundamentals is nearly fully valued, but will still move higher pending the November election.
Kahuna, CFA
Investment Professional
1974 - Present

updated 14 minutes ago Sponsored by:
	DOW	15,294.50	-12.67	-0.08%
	S&P 500	1,650.51	-4.84	-0.29%
	NASD	3,459.42	-3.88	-0.11%

SWHC	$9.09		+0.12	+1.34%
Smith & Wesson Hol…		CAPS Rating:

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Does the Street Have Smith & Wesson Holding Figured Out?

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Report this Comment On July 01, 2012, at 8:36 PM, kahunacfa wrote:

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