Please ensure Javascript is enabled for purposes of website accessibility

Why American Outdoor Brands Corporation Gained 11% in September

By Demitri Kalogeropoulos - Oct 8, 2018 at 10:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales growth, plus profitability gains, drove investor optimism higher last month.

What happened

American Outdoor Brands (SWBI 2.97%) stock beat the market last month by gaining 11%, compared with a 0.4% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

^SPX Chart

^SPX data by YCharts.

The rally pushed shares back into positive territory for the year, and the firearms retailer is currently up 14%, compared with a 7% gain in the S&P 500.

So what

Investors pushed shares higher in response to a surprisingly strong earnings report by the Smith & Wesson owner. Sales improved 8% in the fiscal first quarter, the company said in late August, and those gains came despite a reduced reliance on price cuts. As a result, gross profit margin jumped to 38% of sales from 32% in the year-ago period.

Now what

American Outdoor Brands' latest product releases are finding traction with firearm enthusiasts, and that success bodes well for growth, given the rising demand trend across the industry.

The retailer's sales and profits are subject to big swings that are driven by political and regulatory news, though. Investors should take that elevated volatility into account when considering whether to buy into the firearm giant's recent rally.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Smith & Wesson Brands, Inc. Stock Quote
Smith & Wesson Brands, Inc.
$13.52 (2.97%) $0.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.