What happened 

Shares of American Outdoor Brands Corp (NASDAQ:AOBC) jumped 48.2% in August, according to data provided by S&P Global Market Intelligence, after announcing much better than expected earnings for the fiscal first quarter of 2019. Most of the move came on the final day of the month and shares have held gains in early September. 

So what 

Quarterly revenue rose 8% versus a year ago to $138.8 million and non-GAAP earnings of $0.21 per share easily topped the $0.12 in earnings that Wall Street expected. Cost cutting and fewer promotions helped drive the quarter's improvement. 

Hand gun on table with bullets.

Image source: Getty Images.

A 630 basis point increase in gross margin to 37.8% also helped the bottom line and showed investors that cost cutting is paying off. Demand may ebb and flow, but if costs are contained American Outdoor can stay afloat. 

Now what 

Gun demand has been fairly weak over the past year and a half and that's put a lot of pressure on financial results lately. Revenue is down and companies are reporting losses at times, including a $0.04 loss per share from American Outdoor a year ago.

It should be no surprise in that environment that investors have sold gun stocks as well. But they've rushed back in on even a glimmer of hope that demand may be returning for gun manufacturers. I'd like to see more than a quarter of evidence that revenue and margins are improving, but the first quarter earnings report was definitely a step in the right direction for American Outdoor Brands. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.