What happened

Vista Outdoor (NYSE:VSTO), a maker of outdoor sporting goods and also ammunition for firearms (but no longer the firearms themselves), reported its fiscal fourth-quarter 2020 earnings this morning, sending its shares down 29.4% by 11:15 a.m. EDT.

Vista "missed" on its sales for the quarter, reporting $426 million in revenue versus the $456 million Wall Street had expected. Vista did beat on earnings, however, with pro forma profits coming in a nickel above the $0.06 a share that analysts predicted. 

Colorful display of ammunition in different shapes and sizes

Image source: Getty Images.

So what

So why is Vista down so much after "beating" on earnings? Here's the thing: The $0.05 in "extra" earnings that Vista made in the final quarter of fiscal 2020, it seems likely to give back in the first quarter of 2021. The company's guidance included in its earnings report is in fact calling for Q1 earnings of no better than breakeven -- and perhaps as bad as a $0.05 per-share loss. 

Although CEO Chris Metz said that "the impact of the COVID-19 pandemic on our operations in the fourth quarter was minimal," and the company enjoyed "stronger than expected demand in many of our categories, including commercial ammunition, bicycle helmets and accessories, and outdoor cooking," management set this cautious tone in guiding investors on what to expect in Q1 -- and declined entirely to speculate on what full-year earnings might look like.

Now what

Moreover, Vista is anticipating Q1 sales to range from $370 million to $400 million, down nearly 20% from last year's Q1. Not only does this not really jibe with management's statement about "stronger than expected demand," it also moves in the opposite direction from where Wall Street thought the company was heading. Street estimates still call for Vista to do more than $470 million in sales in Q1 (thus up, not down, from Q1 2020).

Now Vista says that's not going to happen. Investors aren't happy about that, and I cannot say as I blame them.