Why Smith & Wesson Holding Corp. Shares Got Shot Down

Is Smith & Wesson's move meaningful or just another movement?

Jun 20, 2014 at 1:08PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of firearm products specialist Smith & Wesson Holding (NASDAQ:SWHC) sank 10% today after its full-year guidance disappointed Wall Street.

So what: Smith & Wesson's fiscal 2014 fourth-quarter results topped expectations -- earnings per share of $0.45 on revenue of $170.4 million versus the consensus of $0.39 and $164 million -- but downbeat guidance for full-year fiscal 2015 is forcing analysts to quickly recalibrate their growth estimates. Of course, management said it still expects to grow 8% to 10% over the long term, suggesting that today's double-digit pullback could be an opportunity for patient investors.

Now what: Management now sees 2015 EPS of $1.30-$1.40 on revenue of $585 million-$600 million, well below the consensus of $1.50 and $620 million. "We believe that by executing on our strategy, we are well positioned to continue to take market share and deliver profitability, even as the consumer market for firearms returns to a more normal environment," President and CEO James Debney reassured investors in a press release. More important, with Smith & Wesson shares now off about 12% from their 52-week high and trading at a still-cheapish forward P/E of 10, the downside seems limited enough to bet on that bullishness. 

Breaking: This small cap stock is poised to soar higher
Growth stocks jump up and down on a daily basis, but the smartest investors know the path to riches is finding these big winners early. The mission of The Motley Fool's Rule Breakers team is to identify these once-in-a-generation stocks. This team of analysts recommended Baidu in 2006 (up +2,000%) and Chipotle in 2007 (up +800%). And luckily for you (and their thousands of existing members), the team believes it has found its next big winner. Click here for your copy of this timely report.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information